RBI/2005-06/ 79
DBOD.No.BP.BC 21 ./ 21.01.002/2005-06
July 26, 2005
All commercial banks
Dear Sir,
Risk weight for Capital Market Exposure
Please refer to our master circular DBOD.No.BP.BC
13/21.01.0002/2005-06 dated July 4, 2005 in terms of which the risk weight for
credit risk on capital market exposures is 100 percent. Bank's capital market
exposure covers the following
a. direct investment by a bank in equity shares,
convertible bonds and debentures and units of equity oriented mutual funds
b. advances against shares to individuals
for investment in equity shares (including IPOs /ESOPs), bonds and debentures,
units of equity oriented mutual funds, etc
c. secured and unsecured advances to stock
brokers and guarantees issued on behalf of stock brokers and market makers
2. It has now been decided to increase the risk
weight for credit risk on capital market exposures as listed above from 100
percent to 125 percent with immediate effect.
Yours faithfully,
(Anand Sinha)
Chief General Manager- In-Charge
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