Risk Weight On Consumer Credit Covers Educational Loans Too

Last updated: 31 January 2008

UCBs - Risk Weight On Consumer Credit Covers Educational Loans Too

RBI/2007-2008/231
UBD. PCB.Cir.No. 31 /09.11.600/07-08

Prudential Norms for Capital Adequacy –
Risk Weight for Educational Loans-UCBs

With refer to the circular UBD.PCB.Cir.33/09.116.00/04-05 dated January 5, 2005 the risk weight on consumer credit including personal loans was increased from 100 percent to 125 percent. At present, 'educational loans' are being classified as a part of 'consumer credit' for the purpose of capital adequacy, and accordingly attract a risk weight of 125 per cent.

2. The position has since been reviewed and it has been decided that 'educational loans' will not be classified as consumer credit for the purpose of capital adequacy norms. Accordingly, the risk weight applicable to educational loans would be 100 per cent, as against 125 per cent at present.