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RBI’s ₹84,000 Crore Shock for Banks: Why Your Next Personal Loan May Get Pricier

Let’s be honest—most of us don’t usually follow RBI circulars like weekend cricket scores. But every now and then, something in the policy world quietly changes the rules on your credit card, your personal loan, and even the safety of the money you’ve parked in a bank. This is one of those moments.

On November 16, 2025, the Reserve Bank of India did exactly that—tightened the screws on how banks and NBFCs lend out unsecured loans. And if you're wondering whether it affects you, the short answer is yes.

So, What Did RBI Actually Do?

In a nutshell, the central bank increased what’s called the “risk weight” on unsecured loans. Here’s what changed:

Personal loans and consumer durable loans: Risk weight bumped up from 100% to 125%
Credit cards: For banks, it now stands at 150% (up from 125%); for NBFCs, 125% (up from 100%)
Unsecured NBFC lending: Same hike—from 100% to 125%

If you're not a finance nerd, “risk weight” probably sounds like something out of a gym routine. But it’s really just how much money banks have to hold aside in case a loan goes bad. More risk = more capital = tighter purse strings.

Why the Sudden Tightening?

This isn’t exactly out of the blue. The RBI has been dropping hints for a while.

Unsecured Lending Was Booming

Over the past few years, Indians have been borrowing more on credit cards and personal loans than ever before. In fact, by March 2023, nearly one-third of all personal lending in the country had no collateral backing it.

Rising Defaults

The flip side? Over 50% of new bad loans in retail banking during the first half of FY25 came from unsecured categories. The RBI clearly saw this coming—and acted before things spiralled.

A Bigger Buffer

The higher risk weights are RBI’s way of saying: “Look, if you’re going to lend without collateral, you better be ready to absorb the hit if something goes wrong.”

Back to Pre-COVID Basics

According to Governor Sanjay Malhotra, this isn’t some new crackdown. It’s more like returning to the kind of risk controls that worked well before the pandemic gave way to looser lending norms.

Who’s Feeling the Pressure?

Banks

Let’s start with the biggest domino. Banks will now need to hold back a much larger pool of capital—an estimated ₹84,000 crore, according to SBI economists. That’s capital they could’ve otherwise lent out or used for expansion.

Expect a more cautious stance in the months ahead, especially when it comes to unsecured loans and credit card limits.

NBFCs

These non-bank lenders are also in a bit of a pinch. Since it's now more expensive for banks to fund NBFCs, money could get tighter for them too—especially those heavily reliant on unsecured lending.

Borrowers

If you’re planning to swipe your credit card for that fancy new fridge or apply for a personal loan, don’t be surprised if interest rates creep up or if your application faces stricter scrutiny.

Why Are Unsecured Loans Riskier?

It's pretty straightforward: no collateral means no fallback. If someone stops repaying, the lender can’t repossess a house or car—it’s just a write-off.

Also, almost half of borrowers in this segment already have another major loan running. If a few payments get missed, the domino effect can be fast and nasty.

A Quick Trip Down Memory Lane

2019: RBI tried to ease things up by reducing risk weights (from 125% to 100%) on unsecured consumer credit—excluding cards.
2023: Saw a reversal as lending growth exploded; RBI reinstated the higher risk weights (125% for loans, 150% for cards).
2025: Now, the same lens is being turned on NBFCs to make sure nobody’s flying too close to the sun.

RBI’s Broader Game Plan

This isn’t just about risk weights. It’s part of a broader strategy to make Indian banking safer and more forward-looking.

Closer Watch on Big NBFCs

The central bank has also brought 15 major NBFCs under tighter supervision, with enhanced capital and compliance requirements.

Risk Planning Before the Crisis

There’s a quiet shift happening toward what the RBI calls an “expected loss-driven” model. That means lenders are expected to plan for future bad loans, not just clean them up after the fact.

What Should You Watch Going Forward?

Loan Approvals Could Get Tougher: Especially if you’ve already got multiple EMIs running or a borderline credit score.
Interest Rates May Rise: As banks absorb higher capital costs, some of that pressure could pass to borrowers.
Fewer Easy Loans, But a Safer System: The upside? Stronger banks. Less reckless lending. A financial sector that doesn’t flinch when global markets turn sour.

Final Word

This isn’t just a technical rule change—it’s a signal shift. The RBI is telling lenders to slow down, tighten up, and build cushions before the next storm hits. For borrowers, it means more hoops—but also a more stable economy in the long run.