The Reserve Bank of India (RBI) has increased risk weights for consumer credit, including personal loans, by 25 percentage points to 125%, necessitating banks to maintain higher capital reserves. The move is aimed at curbing rapid growth in personal loans and addressing concerns about the rising reliance of non-banking financial companies (NBFCs) on bank borrowings. Analysts anticipate increased costs for borrowers, limiting access to credit and potentially slowing growth in personal loans and credit cards. The RBI’s tightening measures align with Governor Shaktikanta Das’s emphasis on robust risk management and stronger underwriting standards in the financial sector.