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
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