23 Nov 2023 , 10:50 AM
Following the Reserve Bank of India’s tightening of regulations, SBI Chairman Dinesh Kumar Khara said on Wednesday that there will be ‘moderation’ in the bank’s unsecured loan portfolio. Higher risk weights, he added, will have a 0.02-0.03% impact on net interest margins in the December quarter, but a brighter picture will emerge in the following quarter.
‘Whatever we were doing, we will continue to do, but there will be some moderation,’ Khara said on the sidelines of a FIBAC event here, when questioned about the RBI’s tightening of norms.
After RBI requested lenders to be cautious, it raised risk weights on unsecured lending for banks and non-banks earlier this month.
The RBI has requested lenders to put additional money against each risky loan, resulting in larger buffers in the event of stress. Personal loans and credit card borrowings will also become more expensive as a result of the change.
Khara stated that interest rates on such loans will rise in tandem with the cost of funds, noting that the bank will bear a capital cost as a result of the new regulations.
Khara stated earlier last month that the bank is unconcerned about its unsecured loan portfolio and attributed the portfolio’s outstanding performance to its policy of lending to salary account users or those working for well-rated corporates.
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