RBI alters large exposures framework for banks to cut concentration of risk

The Reserve Bank of India Monday modified the guidelines on large exposures for banks with a view to reduce concentration of risk and align them with the global norms.

The modified 'Large Exposures Framework' (LEF) provides exclusion of entities connected with the sovereign from definition of group of connected counter-parties.

It also introduces economic interdependence criteria in definition of connected counter-parties.

The amendment, the RBI said, is being done in order to "capture exposures and concentration risk more accurately" and to align the above instructions with international norms.

As per the revised norms, the sum of all the exposure values