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ā¢ The recent increase in risk weighting mandated by the central bank is expected to have varying effects on non-banking finance companies (NBFCs).
ā¢ Higher-rated NBFCs may face a steeper impact, while lower-rated lenders may face greater challenges as banks may still find it viable to lend to larger non-bank borrowers with lower risk profiles.
ā¢ Banks may have to increase interest rates or slow lending to conserve capital, and may see a 50-60 basis point impact on Tier I capital adequacy due to the rise in risk weights.