Interest rates to rise on unsecured loans and NBFCs ?

The Reserve Bank of India (RBI) recently made a significant change that affects how banks and finance companies handle consumer loans. They increased the amount of money these lenders need to keep aside when giving out such loans. Before, they had to keep 100% of the loan amount in reserve, but now it's increased to 125%.

Consumer loans include things like personal loans but not home loans, education loans, vehicle loans, or loans secured by gold and gold jewelry.

The RBI did this because they noticed that some types of personal loans were growing really fast. They want to make sure that banks and finance companies are being careful and taking steps to manage any potential risks.

This change also applies to credit card transactions. If you have a credit card, the bank or finance company has to set aside more money to cover any outstanding amounts. This could mean higher interest rates for credit card users.

Experts believe that because banks and finance companies now have to set aside more money, they might increase interest rates for borrowers. This could impact how much people pay in monthly installments for loans.

In simpler terms, if you're someone looking to get a loan or use your credit card, this change might mean you end up paying more in interest. It's like the RBI is telling banks and finance companies to be more careful and that might affect your pocket.

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