The Reserve Bank of India (RBI) on Friday increased lenders' single borrower exposure limit for Non-Banking Financial Companies (NBFCs) which do not finance infrastructure, to 15 per cent of capital funds.
The single borrower exposure limit has been increased from 10 per cent of capital funds and is effective up to December 31, 2018.
The RBI has also relaxed liquidity norms. With immediate effect, banks will be permitted to also reckon Government securities held by them up to an amount equal to their incremental outstanding credit to NBFCs and Housing Finance Companies (HFCs), over and above the amount of credit to NBFCs and HFCs outstanding in their books as on October 19, 2018.
Liquidity coverage ratio refers to highly liquid assets that financial institutions need to hold in order to meet short-term obligations.
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