{"id":17276,"date":"2023-11-22T01:33:04","date_gmt":"2023-11-21T20:03:04","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=17276"},"modified":"2025-04-05T03:16:22","modified_gmt":"2025-04-04T21:46:22","slug":"risk-weight","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/risk-weight\/","title":{"rendered":"What is Risk weight?"},"content":{"rendered":"<h2>Why in the news?<\/h2>\n<ul>\n<li>The Reserve Bank of\u00a0India has raised risk weight on consumer credit by banks and NBFCs to 125%, compared to 100% earlier.<\/li>\n<\/ul>\n<h2>About Risk weight<\/h2>\n<ul>\n<li>Every rupee lent by the bank is a cost or has an\u00a0implication on its capital position.\u00a0<\/li>\n<li>Risk-Weighted Assets:\u00a0These are used to determine\u00a0the minimum amount of capital a bank must hold in relation to the risk profile of its lending activities and other assets.<\/li>\n<li>The Reserve Bank of India decided in April 1992 to introduce a risk asset ratio system for banks (including foreign banks) in India as a\u00a0capital adequacy measure in line with the Capital Adequacy Norms prescribed by Basel Committee.<\/li>\n<li>Impacts\n<ul>\n<li>Lower the risk weight, lower the rate of interest. Therefore, risk weights impact\u00a0borrowers indirectly and is felt\u00a0through the pricing of loans.<\/li>\n<li>The increase in risk weights by the RBI will\u00a0elevate funding costs for NBFCs and impact capital requirements.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3>Q1) What Is the Capital Adequacy Ratio?<\/h3>\n<p>The capital adequacy ratio (CAR) is an indicator of how well a bank can meet its obligations. Also known as the capital-to-risk weighted assets ratio (CRAR), the ratio compares capital to risk-weighted assets and is watched by regulators to determine a bank&#8217;s risk of failure.\u00a0<\/p>\n<p><strong>Source:<\/strong> <a href=\"https:\/\/www.thehindubusinessline.com\/blexplainer\/bl-explainer-what-rbis-increase-in-risk-weights-mean-to-the-borrower\/article67554070.ece#:~:text=What%20are%20risk%20weights%3F,cover%20these%20risk%20weighted%20assets.\" target=\"_blank\" rel=\"nofollow noopener\"><u>What does the RBI\u2019s increase in risk weights mean to the borrower?<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Reserve Bank of India has raised risk weight on consumer credit by banks and NBFCs to 125%, compared to 100% earlier.<\/p>\n","protected":false},"author":5,"featured_media":17277,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-17276","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/17276","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=17276"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/17276\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/17277"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=17276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=17276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=17276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}