LARGE EXPOSURES FRAMEWORK (NBFC)

Sept. 16, 2019

In a move to increase credit supply to the crisis-ridden NBFC sector, the RBI increased loan exposure limit of banks to a single NBFC (excluding gold loan companies) from 15% to 20% of its capital base.

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According to the extant 'Large Exposures Framework (LEF)', banks' exposure to a single non-banking financial company (NBFC) is restricted to 15% of their available eligible capital base, while general single counter-party exposure limit is 20%, which can be extended to 25% by banks' boards under exceptional circumstances.
Now, it has been decided that a bank's exposure to a single NBFC (excluding gold loan companies) will be restricted to 20% of that bank's eligible capital base.

Source : Livemint

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