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No Concentration

The RBI is actually talking about more stringent exposure limits for certain categories of NBFCs

No Concentration

The asset quality deterioration in India Inc has made the Reserve Bank of India (RBI) a bit conservative. The apex bank has decided to reduce banks' exposure to single as well as group borrowers. Group borrowers exposure has been capped at 25 per cent of capital, while single borrower exposure limit is 15 per cent. The bank's exposure to a single NBFC has also been restricted to 15 per cent of the capital base.

The RBI is actually talking about more stringent exposure limits for certain categories of NBFCs. In fact, it has capped exposure to a group of connected NBFCs to 25 per cent of the capital base. There is relief, however, for government companies. They are allowed to borrow more as they will not be considered part of a group of connected entities. It may be remembered that the RBI had introduced the large borrower framework some three years ago to reduce concentration risk.

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