The BSE Bankex index fell 1.12 per cent.
Among non-banking financial companies, shares of SBI Cards and Payment Services tumbled 6.70 per cent, Ujjivan Financial Services fell 5 per cent, Arman Financial Services (3.91 per cent) and IIFL Finance (3.78 per cent).
The Reserve Bank on Thursday tightened norms for consumer credit as it asked banks and NBFCs to assign a higher risk weight for unsecured personal loans, a move aimed at making the lenders more cautious on such advances.
The risk weight on unsecured consumer loans has been raised by 25 percentage points.
The new regulations, however, will not be applicable on housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery, the Reserve Bank said in a circular.
A higher risk weight means that lenders need to set aside more funds as a safety net for consumer loans, which could make such credit more expensive. In simple words, a higher risk weight restricts banks’ lending capacity.
In the circular, the RBI said, “It has been decided to increase the risk weights in respect of consumer credit exposure of commercial banks (outstanding as well as new), including personal loans, but excluding housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery, by 25 percentage points to 125 per cent”.
A similar raise has been effected in case of credit card receivables, as per the circular on ‘Regulatory measures towards consumer credit and bank credit to NBFCs (non-banking financial companies)’.