Is there any one who knows the Reason behind todays aggressive fall in banknifty (Friday-18Nov)
So the reason is Governments policy The RBI on November 16 raised the risk weights for lenders and NBFCs by 25 percentage points to 125% on unsecured retail loans.
The central bank hiked the risk weights credit card exposures by 25 percentage points to 150% and 125% for banks and NBFCs, respectively. It has also asked the banks to set aside additional capital against loans to NBFCs, where the risk weight is currently below 100%.
The new risk weight, or the capital that banks need to set aside for every loan, will apply to personal loans for banks and to retail loans for NBFCs, the RBI said. The housing, education and vehicle loans as well as loans secured by gold and gold jewellery will be excluded, added the RBI.
The new norms could have been prompted by the potential risk build-up in these categories after the robust growth witnessed in these segments post Covid.
IN SIMPLE LANGUAGE IF A BANK GIVES YOU ANY UNSECURED LOAN OF RS. 100 SO IT GIVES YOU 92 FROM ITS DEPOSITS AND 8 FROM ITS OWN CAPITAL BUT Now RBI HAS GIVEN INSTRUCTIONS TO BANK TO USE MORE PART OF THEIR OWN CAPITAL TO PROVIDE UNSECURED LOANS FOR EXAMPLE NOW IF YOU TAKES 100 RS. LOAN THEN BANK WILL HAVE TO GIVE YOU 90 FROM ITS DEPOSITS AND 10 FROM THIER OWN CAPITAL SO BANKS HAS TO USE THEIR MORE CAPITAL TO PROVIDE A LOAN AND THATS ALL WE CAN UNDERSTAND THAT IF BANKS HAVE TO USE MORE MONEY FROM THEIR OWN CAPITAL THEN ITS A MOJOR LOSS FOR THEM THATS WHY ALL BANKS AND NBFC'S ARE SEEN IN PRESSURE TODAY