RBI seeks to cap banks' exposure to large borrowers

The RBI has proposed the capping of exposure of banks to each counter-party or group of connected counter-parties at 20 and 25 per cent of their eligible capital base, respectively. In exceptional cases, boards of banks can allow an extra 5 per cent (of the eligible capital base) exposure to a single borrower. There must be a board-approved policy in this regard. RBI has separately issued comprehensive guidelines for restricting additional exposure to large borrowers whose existing borrowings are more than Rs 25000 cr.