Will increase interest rates if cost of funds rises: SBI Chairman

As per a recent SBI research report, the banking industry will require Rs 84,000 crore of excess capital or five per cent increase on Rs 15.2 lakh crore capital requirement following the RBI decision to tighten the risk weights on unsecured loans.

State Bank of India (SBI) chairman Dinesh Khara on Wednesday said the RBI’s move to raise risk weights on consumer credit, credit card dues and lending to NBFCs may result in an increase in the interest rates by the bank.

“If at all my costs of funds are going up, I will certainly increase the interest rates. RWA (risk weighted assets) means that the capital allocation goes up and there is a capital cost. So, naturally it will have an impact,” Khara told reporters without quantifying the percentage increase in the interest rates.

As per a recent SBI research report, the banking industry will require Rs 84,000 crore of excess capital or five per cent increase on Rs 15.2 lakh crore capital requirement following the RBI decision to tighten the risk weights on unsecured loans.