MUMBAI: RBI governor Shaktikanta Das’s decision to put an end to the consumer credit party took its toll on share prices of retail lenders as markets evaluated the capital required by these institutions.

Financials experienced significant losses, contributing to the downturn in major indices.Ratings agency S-P and an SBI report have said that the capital requirement for banks would go up by 60 basis points (100 basis points equals 1 percentage point).According to SBI, the impact of higher risk weightage on capital would be Rs 84,000 crore.Lenders will need to boost capital mop-up as RBI has termed them more risky and directed them to hold 25% extra capital than before for consumer loans.

According to analysts, banks with a higher share of consumer lending or NBFC loans are IDFC First Bank, Axis Bank, and HDFC Bank, followed by SBI and ICICI Bank.Among finance companies, SBI Card was the worst impacted as its entire portfolio would be subject to higher risk weightage, and its borrowing costs are also likely to rise.

The other NBFCs with high exposure to consumer credit are Bajaj Finance and Poonawalla Fincorp.However, Poonawalla Fincorp said that it had more than enough capital.

“The increase in the risk weight from 100% to 125% on the company’s consumer credit exposure will be marginal and is expected to be around 220 bps.

With this, the resultant capital adequacy would become around 40% — still significantly higher than the regulatory requirement of 15%.

According to our long-term plans, we do not expect our debt equity to go beyond 4x,” the company said in a statement.A report by Soumya Kanti Ghosh, SBI’s chief economic adviser, said that RBI’s decision to raise the risk weights is an attempt to send out a message of addressing any incipient financial stability risks in the system as such risks are coincident indicators.

“Proactively managing such risks seems the best policy option rather than managing delinquencies (if any) post occurrence of events,” the report said.According to Ghosh, RBI is done with its rate hikes and is now using liquidity and “macroprudential measures to achieve its desired goal of inflation and growth”.“Slower loan growth and an increased emphasis on risk management will likely support asset quality in the Indian banking system,” said Geeta Chugh, credit analyst at S-P Global Ratings.