RBI's loan risk weight cuts to free up bank capital for lending, analysts say

ICICI Bank

08/10/2025 05:27

** RBI's proposal to reduce weights on some loans like housing and credit cards will benefit banks as it will release more capital for lending, analysts say

** Proposals effective April 1, 2027

** Macquarie calls it a "pragmatic approach", positive for corporates, mortgages and MSMEs

** Changes to expected credit loss framework will promote prudent lending and efficient capital use, says Motilal Oswal

** Adds, lower risk weights on housing, MSMEs and corporates will support credit growth and boost capitalisation ratios, making overall impact positive for well-capitalised banks

** Financials .NIFTYFIN and banks .NSEBANK, .NIFPVTBNK trading flat on the day after a six-session rally; Nifty 50 .NSEI up 0.2%

** YTD, financials climb 14% vs Nifty 50's 6.5% rise

 (Reporting by Kashish Tandon in Bengaluru)

 ((Kashish.tandon@thomsonreuters.com))