The Reserve Bank of India (RBI) has issued final guidelines on risk weights for retail, corporate, and sovereign exposures, set to take effect on April 1, 2027. The new framework aims to optimize capital allocation across the banking system by linking capital requirements more closely to the risk profiles of borrowers. Under the revised norms, fund-based and non-fund-based exposures can qualify for a 75% risk weight if they are extended to individuals or small businesses with a turnover of up to ₹500 crore (roughly $60 million USD) and meet specific criteria. Eligible loans include home loans, education loans, and small business credit, with a cap of ₹10 crore (roughly $1.2 million USD) per borrower. Additionally, credit card receivables that are paid in full before the due date will receive favorable treatment, reducing their capital charge to promote timely repayments. However, the RBI has tightened exclusions, imposing higher capital requirements on unsecured personal loans and revolving credit card balances, which will continue to carry a 125% risk weight. The guidelines also introduce a loan-to-value (LTV) framework for housing loans, offering lower risk weights of 20-40% for individual borrowers, while higher risk weights apply to those with multiple housing loans and broader real estate exposures.