In yet another move to close the regulatory gap between banks and shadow banks, the Reserve Bank of India (RBI) has mandated exposure limits to the non-banking finance companies, in line with commercial banks.
In the large exposure framework released on Tuesday, the regulator capped aggregrate exposure of NBFCs which are in the upper layer toward one entity at 20% of capital base. The limit can only be extended by another 5% with board’s approval. For a particular borrower group, the cap is at 25%, with additional 10% if exposure is towards infrastructure.
The upper-layer NBFCs are typically the top