This is expected to free up to Rs 19,000 crore, according to an estimate by the Economic and Research wing of State Bank of India. Risk weight is the capital that banks have to set aside as a buffer while lending to NBFCs. The risk weights on lending to group investment companies will continue to be at 100% of the loan. Banks' exposure to NBFCs is estimated at Rs 5.7 lakh crore, of which exposure to asset finance companies, infrastructure finance companies and infrastructure debt funds is already risk-weighted, based on their ratings. "The proposal to reduce the risk weights on bank exposure to better-rated NBFCs will help reduce their cost of funds even further.

Source: dna February 07, 2019 23:26 UTC