Gurudutt Tiwari. New Delhi3 minutes ago
- copy link
Banks will shy away from giving loans to people with weak CIBIL score (less than 730). Even if they give a loan, they will increase the interest rates or ask for more collateral.
RBI’s new rule ‘ECL Direction-2026’ is going to come into effect from April 1, 2027. Under this, if a customer defaults in paying two loan installments (EMI), banks will have to keep aside up to 12 times more amount. The meaning of keeping it aside is that so much money will be removed from the balance sheet of the bank, that is, the profit of the banks due to this will be around Rs 42,000 crore. May be less.
In such a situation, banks will shy away from giving loans to people with weak CIBIL score (less than 730). Even if they give a loan, they will increase the interest rates or ask for more collateral. It is a matter of concern that more than half (about 62%) of the loan applicants in the country have CIBIL score less than 730. In such a situation, it will become very difficult for these people to take home, auto and education loans from next year. Banks will now focus more only on premium customers.
Damodaran C, Chief Risk Officer, Federal Bank, says – After the new rules, banks will give loans at higher interest to those customers who are more risky in giving loans. Those with better credit scores will get more concessions. There will be more focus on early identification of risks and recovery.
Focus on premium customer
1. How will the new system change the way banks work?
Under the new rule, banks will have to estimate in advance how much of the loan may go bad in the future and will have to keep a large amount aside in advance. Now they do this after the loan defaults (90 days).
2. How will banks assess future defaults?
Things like customer’s payment record, change in CIBIL, loss of income, risk of job loss and loan to value ratio (loan amount compared to the value of the property) will be examined.
3. How much amount will be kept for how many days the installment is missed?
Currently, banks are charging Rs 10,000 for defaulting on EMI for 30 days on a home loan of Rs 25 lakh. Have to be kept separately, in the new rule 25,000. Rs 10,000 even on days 31 to 60. Which was reduced to ₹1.25 lakh. Rs 3.75 lakh (15%) for more than 91 days. Had to be kept, now Rs 5 lakh directly. Will be done.
4. How many are the 38% on which we will focus more?
Premium customers with 730+ CIBIL score are around 7 crore.
Source link
[ad_3]
