Personal loan interest rate likely to rise up to 1.5%; loan eligibility norms to get tighter in 2024 with RBI new rule

Mohit Mittal in The Economic Times Wealth magazine commented on the RBI notification. In the story, Mohit suggests that the impact on banks may be moderate, especially for well-capitalized ones with diversified portfolios and higher capital adequacy ratios. He notes that these banks might absorb the impact, while others are likely to pass on the increased costs to borrowers. He also acknowledges the estimates of a negative impact on the equity tier-1 ratio in the range of 40-70 basis points (bps) at the sector level. He emphasizes that well-capitalized banks may experience smaller and gradual interest rate hikes for unsecured retail loans. Additionally, Mohit anticipates that the recent rule changes by the RBI could pose bigger challenges for NBFCs, potentially resulting in a slowdown in lending and stricter underwriting standards.