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RBI cuts risk weight on consumer credit to boost consumption

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The Reserve Bank of India (RBI) on Thursday said it has reduced the risk weight requirement for consumer loans to 100 per cent, a move that will reduce cost of such loans. Currently, the risk weight requirement for such loans is 125 per cent. The relaxed requirement would not be applicable to credit cards. Risk weight refers to the capital banks keep aside as provisioning to cover any loan defaults.

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