RBI caps group entity exposure limit for banks at 25 percent

Reuters
A private money trader counts Indian Rupee currency notes at a shop in Mumbai August 1, 2013. REUTERS/Vivek Prakash/Files

MUMBAI (Reuters) - The Reserve Bank of India said on Thursday it will cap banks' exposure to a single entity to 20 percent of a lender's capital base and to 25 percent limit to a group of connected entities, according to a circular on Thursday.

Currently the RBI allows a bank to lend up to 15 percent of its capital funds to a single borrower and 40 percent to a group.

The central bank also said that banks must classify the sum of all exposures of 10 percent or above as "large exposure" and report them to the RBI.

The rules will be effective April 1, 2019.

For the full circular, see: http://bit.ly/2gp45gU

(Reporting by Suvashree Dey Choudhury; Editing by Gopakumar Warrier)