Unsecured Loan Limit May Be Risk-Based

Move in line with international banking norms

The Reserve Bank of India (RBI) is understood to be planning to link the limit on unsecured advances to the individual risk profile of banks in line with international norms.

This follows the review of the existing norm of 15 per cent cap on lending to unsecured advances by commercial banks.

However, it is not clear whether the cap will be done away with at one go or in phases. With the advent of the Basle II norms, banking is gradually going to be based on risk management and better risk profiling.

Banking sources said when most of the areas in sector have been deregulated