Wednesday, June 15, 2016

RBI Proposal - Framework to mitigate risk of lending

  • Incremental exposure of the banking system to a borrower beyond permissible lending limit will be deemed to carry higher risk.
  • Plans to put in place prudential risk recognition measures.
  • 3% standard asset provision on the banking system's incremental exposure.
  • Additional risk weight of 75% over and above the applicable risk weight for exposure to borrower.
  • Banks may subscribe to bonds issued by borrowers (over and above the permissible lending limit) in the first year of the framework.
  • RBI to allow banks specific exemptions to charge differentiated interest rate to specified borrowers.

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