Expressing concern over credit quality in housing and real estate, the Reserve Bank of India (RBI) today increased risk weights for all outstanding commercial real estate exposures of banks to 125% from 100% with immediate effect.RBI has also hiked, with immediate effect, the risk weight for credit risk on capital market exposure to 125% from 100%including direct investment by a bank in equity shares, convertible bonds and debentures and units of equity-oriented mutual funds."The non-food credit growth has been significantly buoyant and is getting broad-based. However, the upswing continues to be driven by housing and real estate and hence a greater need to ensure credit quality," RBI said in its first quarterly review of monetary policy for 2005-06.The increase in risk weight average includes fund based and non fund based exposures secured by mortgages on commercial real estates and investments in mortgage backed securities and other securitised exposures.The increase in risk weightage for capital market exposure also includes advances against shares to individual for investment in equity shares, bonds and debentures, units of equity oriented mutual funds, secured and unsecured advances to stock brokers and guarantees issued on behalf of stock brokers and market makers.
