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Limit set for credit exposure for banks

New regime on loans to one party; to kick in by Apr 2019

Abhijit Lele  |  Mumbai 

To avoid risks to lenders from excessive corporate exposures, the Reserve Bank of India (RBI) on Thursday issued final rules limiting single party exposure to 20 per cent of tier-I capital and 25 per cent at the group level. The large exposure framework (LEF) would be effective from April 1, 2019. The transition to new regime has be completed by March 2019, RBI said in statement. This would mean banks would get 28 months to adjust to the new norms. Lenders have to shore up capital base and rework or trim exposures to stay within the norms. Analysts and bankers said ...

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