Mumbai: The Reserve Bank of India (RBI) on Monday revised its guidelines on banks’ exposure to large borrowers which had taken effect on 1 April this year. The guidelines had capped every bank’s exposure to a group of connected firms at 25% of its core capital, and to an individual company at 20%. For instance, exposures where the principal and interest are fully guaranteed by the government or exposures to central and state governments will be excluded from counter-party exposure. The central bank also said that banks need to take into account their direct and indirect exposure to an underlying asset while calculating total exposure. These structures can include mutual funds, venture capital funds, alternative investment funds, investment in security receipts, real estate investment trusts or infrastructure investment trusts.

Source: Mint June 03, 2019 18:33 UTC