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Banks will be able to lend more to customers for buying consumer products such as mobile phones, home appliances, two-wheelers and three-wheelers, with the Reserve Bank of India cutting the risk weight for consumer credit, including personal loans.
While credit card receivables have been excluded, what this cut means is that banks can offer consumer loans by setting aside relatively lesser capital. The RBI on Thursday cut the risk weight to 100 per cent from 125 per cent.
This reduction in risk weight comes at a time when the consumers’ perception of the general economic situation and the employment scenario has softened, according to the RBI’s Consumer Confidence Survey in July.
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