Reserve Bank of India’s New Loan Rules to Redefine Banking from 2027

The RBI has provided a way to divide loan accounts into three categories. The first category will include those accounts that are normal. Potential losses for the next 12 months will be calculated on these.

The second category will include accounts that have already raised red flags. If the customer's condition appears weak or there is a payment problem, the bank will have to calculate the potential loss for the entire loan period.

The third category is the most serious situation. Such accounts will be considered stressed or impaired. Banks will now have to make lifetime loss provisions for these as well. This means that every loan will no longer be considered simply good or bad, but risk areas will also be identified in the intervening period.

The new RBI rules have increased the importance of two dates. If a loan becomes delinquent for 30 days, it will be considered an early warning sign. The bank will be required to act immediately. If the same loan remains delinquent for more than 90 days, the old rules will apply, and it will be considered an NPA (bad loan).

Previously, it often happened that a customer's loan became bad, but other accounts continued to function normally. Now, this will not be easy. The RBI has implemented borrower-level classification. If a large loan of a customer becomes NPA, the bank will have to re-evaluate that customer's remaining exposure. This rule is designed to prevent the concealment of bad accounts.

Personal loans up to ₹10 crore will now benefit from a lower risk weight: The RBI on Monday increased the personal loan exposure limit from ₹7.5 crore to ₹10 crore in its final capital charge guidelines. This means that personal loans up to this amount will now benefit from a lower risk weight.