May 23, 2020
All Scheduled Commercial Banks
(Excluding Regional Rural Banks)
Large Exposures Framework – Increase in Exposure to a Group of Connected Counterparties
Please refer to our circular No.DBR.No.BP.BC.43/21.01.003/2018-19 dated June 03, 2019 on the captioned subject. In terms of para 5.2 of the circular, the sum of all the exposure values of a bank to a group of connected counterparties must not be higher than 25 percent of the bank’s available eligible capital base at all times.
2. On account of the COVID-19 pandemic, debt markets and other capital market segments are witnessing heightened uncertainty. As a result, many corporates are finding it difficult to raise funds from the capital market and are predominantly dependent on funding from banks. Therefore, with a view to facilitate greater 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% to 30% of the eligible capital base of the bank.
3. The increased limit will be applicable up to June 30, 2021.
Chief General Manager-in-Charge