Rbi Tightens Country Exposure Norms For Banks

All commercial banks will be required to make provisions on the net funded country exposures on a graded scale ranging from 0. 25 to 100 per cent under the new country exposure norms that the Reserve Bank of India (RBI) has put in place.

The central bank has directed banks to switchover to real-time monitoring of country exposures (all categories) by March 31, 2003.

The central bank has asked banks to take into account indirect country risk exposures too. If a domestic borrower has a substantial economic dependence on a certain country, this will be construed as indirect exposure for the lending bank. The indirect exposure will quantify as 50 per cent of direct exposure.

To start with, only in respect of the country, where a bank