RBI caps group entity exposure limit for banks at 25%

RBI said that banks must classify the sum of all exposures of 10% or above as ‘large exposure’ and report them to the central bank


The group entity exposure limit  norms will be effective 1 April 2019. Photo: Aniruddha Chowdhury/Mint
The group entity exposure limit norms will be effective 1 April 2019. Photo: Aniruddha Chowdhury/Mint

Mumbai: The Reserve Bank of India said on Thursday it will cap banks’ exposure to a single entity to 20% of a lender’s capital base and to 25% limit to a group of connected entities, according to a circular on Thursday.

Currently the RBI allows a bank to lend up to 15% of its capital funds to a single borrower and 40% to a group.

The central bank also said that banks must classify the sum of all exposures of 10% or above as “large exposure” and report them to the RBI.

The rules will be effective 1 April 2019. Reuters

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