The Reserve Bank of India (RBI) is likely to raise the risk weightage attached to the state government backed papers of public sector undertakings.
The trigger point is increasing default of PSU undertakings in servicing their loans. The latest example is that of one Maharashtra PSU which failed to service interest on its bonds to the institutional investors.
At present, the risk weightage of state government backed PSU paper is pegged at 2.5 per cent. In case of a default, the risk weighage goes up to 100 per cent. Bankers feel that the RBI may raise the risk weightage to 100 per cent at one shot.