State Bank of India (SBI), the India’s top lender, expects minimal impact on its capital ratios from the central bank’s tighter rules for personal loans, its chairman told Reuters in an interview.

The impact of the increased risk weight on personal loans, including credit cards, will be 55-60 basis points (bps), Dinesh Kumar Khara said.

SBI’s capital adequacy ratio stood at 14.28 per cent as of September end.

“If we take into account the bank’s half-yearly profit, which has not yet been adjusted in the capital ratios, then the capital adequacy ratio will rise by 109 bps,” Khara said.

Even after accounting for the increased capital requirement, the bank has enough buffers and does not see the need to accelerate fund raising, Khara said.

The Reserve Bank of India (RBI) asked banks to set aside more capital, following repeated warnings about rapid growth in some personal loans.

Governor Shaktikanta Das had in the recent monetary policy review said banks should strengthen internal processes to curb risks.

The higher capital requirement will make loans costlier and crimp growth, bankers and analysts said.

State Bank of India has already moderated growth in the unsecured personal loans segment, said Khara, who sees the bank maintaining about 15 per cent growth in its retail loan portfolio this fiscal year.

“Capital requirements have not been tightened for car loans, home loans, gold loans ... So core sectors responsible for growth in the economy are untouched,” Khara said, adding that he does not expect the central bank to tighten capital requirements for any of these segments.

However, loans provided through digital lenders for short-term consumption could face a slowdown, he added.

State Bank of India Cards and Payment Services, a subsidiary of SBI focused on credit cards, will see a larger impact on its capital ratios.

The impact could be about 400 bps on its capital ratio, Khara said.

Still, its capital ratio would be about 17 per cent-18 per cent, which is above the regulatory requirement of 15 per cent. The board of SBI Cards will take a call on whether there is a need to raise additional capital, he said.

Meanwhile concluding the turnaround story of the three public sector general insurers, United India Insurance Company Ltd has declared a net profit of Rs 204.30 crore for the second quarter of FY24 from a loss of Rs347.44 crore logged during corresponding period the previous year.

For the quarter ended September 30, United India had earned a net premium of Rs4,163.80 crore (Q2FY23 Rs 3,517.97 crore) and a net profit of Rs 204.30 crore (net loss of Rs 347.44 crore).

During the quarter under review, United India’s net claims paid stood at Rs3,845.95 crore up from Rs3,707.56 crore paid during Q2FY23.

The total operating profit for the period under review stood at Rs 207.05 crore (loss Rs372.16 crore) boosted by profit on sale/redemption of investments of Rs434.38 crore (Rs284.34 crore) and interest/dividend and rent Rs624.96 crore (Rs613.23 crore).

The operating profit under miscellaneous and marine insurance portfolio’s stood at Rs 98.04 crore (Q2FY23 loss of Rs 491.86 crore) and Rs13.71 crore (loss of Rs 11.09 crore), respectively. On the other hand, the operating profit under the fire insurance portfolio has gone down to Rs 95.31 crore from Rs 130.79 crore booked during the previous year corresponding period.

However the solvency margin stands at 0.38 against the stipulated 1.5.

Earlier, the National Insurance Company Ltd had declared a net profit of Rs 44.82 crore for the first half of the current fiscal from a net loss of Rs 1,768.46 crore registered during the previous year corresponding period.

On its part, The Oriental Insurance Company Ltd slashed its first half loss to Rs 42.17 crore from a net loss of Rs 3,586.93 crore during the first half of FY23.

Curiously, at a time when its siblings are moving towards profitability, the industry leader and a public sector listed general insurer.

The New India Assurance Company Ltd had declared a net loss of Rs 199.99 crore for the second quarter of FY24 from a net profit of Rs 260.23 crore posted during Q2FY23.

For the half year ended September 30, The New India had posted a net profit of Rs 60.24 crore down from Rs 151.93 crore booked during the first half of the financial year 2023 (H1FY23).