Mumbai, May 22 (IANS) In a major relief for business groups and conglomerates, the Reserve Bank of India (RBI) has decided to increase the group exposure limit to 30 per cent from the current 25 per cent of the eligible capital base of a bank in view of the coronavirus pandemic.
The increased limit will be applicable up to June 30, 2021.
Under the guidelines on the Large Exposures Framework, the exposure of a bank to group of connected counterparties shall not be higher than 25 percent of the bank's eligible capital base at all times.
Briefing the media, RBI Governor Shaktikanta Das said that on account of the COVID-19 pandemic, debt markets and other capital market segments are witnessing heightened uncertainty and many corporates are finding it difficult to raise funds from the capital market and are predominantly dependent on funding from banks.
“With a view to facilitating the flow of resources to corporates, it has been decided, as a one-time measure, to increase a bank's exposure to a group of connected counterparties from 25 per cent to 30 per cent of the eligible capital base of the bank,” Das said.