Bank, NBFCs Shares Fall As RBI Tightens Consumer Lending Rules. Best Bank Stocks To Invest?

Shares of banks and NBFCs witnessed a sharp decline as the RBI implemented stricter rules on consumer lending. Today, the banking and NBFC sectors nosedive due to the regulatory move. Chakri Lokapriya, CIO & MD at TCG AMC, highlighted that the RBI's action is expected to impact unsecured credit lending. He emphasized the RBI's intention to safeguard the banks' balance sheets. Lokapriya noted that, while the move is beneficial for banks in the long term, there might be medium and short-term pressures for banks. Overall, the regulatory measures aim to ensure stability and resilience in the financial sector. Reserve Bank of India (RBI) tightened rules for personal loans and credit cards to curb sharp growth in the riskier lending products. The Reserve Bank, concerned by the surge in consumer loans, has increased risk weights on retail loans. Banks and shadow lenders (NBFCs) would now need to set aside more capital for every loan to cover for the likelihood of bad loans, making the loans costlier and potentially curbing growth.