How RBI’s Draft Circular on Credit Risk Capital Benefits RBL Bank and SBI Cards

The Reserve Bank of India recently released draft guidelines for the credit risk capital framework, impacting personal loans and credit cards. According to the draft, the risk weight for personal loans and standard credit cards will remain at 125%. However, a significant change has been proposed for the "transactor" category of credit cards, with the risk weight reduced from 125% to 100%.

Understanding Transactor Credit Cards

A transactor credit card user is someone who pays their full balance by the due date every month, avoiding interest and late fees. In contrast, revolvers carry outstanding balances and incur interest charges. This distinction is important because the lower risk weight specifically benefits institutions with a higher proportion of transactor users.

Impact on SBI Cards

SBI Cards has around 40% of its total receivables of ₹56,607 crore coming from transactor users. The proposed reduction in risk weight is expected to free up capital equivalent to 450 basis points for the company. 

Impact on RBL Bank

RBL Bank’s credit card segment constitutes nearly 18% of its overall loan book. Out of its total assets under management of ₹21,499 crore as of the June quarter, around 30% are transactor users. The draft guidelines, therefore, offer RBL Bank an opportunity to optimise its capital allocation and strengthen its lending position.

Market Reaction

Following the announcement, SBI Cards & Payment Services Share Price rose 1.8% to close at ₹921.3, while RBL Bank Share Price ended 4.9% higher at ₹287 on October 8, 2025. The positive sentiment reflects investor expectations of improved capital efficiency for these institutions. RBL Bank shares remain in the F&O ban, preventing new positions in the stock.

Read more:RBI Integrates Bharat Connect and FX-Retail to Simplify Dollar Transactions

Conclusion

The RBI’s draft circular signals a regulatory shift that could enhance capital efficiency for banks and credit card issuers with a high transactor base. By reducing the risk weight for responsible card users, both SBI Cards and RBL Bank stand to benefit in terms of capital release, enabling them to deploy resources more effectively while maintaining regulatory compliance.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

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