Indian Overseas Bank sees 35 bps impact due to RWA norms, says MD and CEO

The lender, Srivastava said, has been able to manage the impact due to its high net interest income (NII).

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26 Aug, 2025 12:21

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Indian Overseas Bank (IOB) witnessed an impact of 35 basis points on its non-banking financial companies (NBFC) and consumer credit portfolio due to the recent increase in the risk weight asset (RWA) by the central bank, said AK Srivastava, managing director and chief executive officer at the public sector lender.

“We had an impact of 35 bps due to the recent prescription on RWA by the Reserve Bank of India (RBI). The impact was on our NBFC and consumer credit portfolio which is approximately Rs 3500 crore,” Srivastava said in the post-results press conference.

Also read: Indian Overseas Bank Q3 net jumps 30% to Rs 722 crore, asset quality stays healthy

IOB, Srivastava said, has been able to manage the impact due to its high net interest income (NII). The NII of the bank stood at Rs 6,176 crore for the October-December quarter of financial year (FY) 2023-24, compared to Rs 5,056 crore in the corresponding quarter last year.

The RBI on November 16 said that it has increased risk weight by 25 percent on consumer credit exposure of commercial banks and non-banking finance companies (NBFCs). Consumer credit of commercial banks and NBFCs attracts a risk weight of 100 percent, which now has been revised to 125 percent.

This was done after RBI Governor Shaktikanta Das in the October monetary policy flagged the high growth in certain components of consumer credit and advising banks and NBFCs to strengthen their internal surveillance mechanisms, address the build-up of risks, if any, and institute suitable safeguards, in their own interest.

Also read: RBI increases risk weight by 25% on consumer credit exposure of banks, NBFCs

The increase in the risk weights of consumer credit exposure of commercial banks (outstanding as well as new), includes personal loans, but excludes housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery, circular said.