RBI lifts ceiling on banks' investments in USE and NPCL
21 Sep 2010
The Reserve Bank of India has extended the exemption in exposure limit to banks' investments in the newly-started United Stock Exchange of India Ltd (USEIL) and the National Payments Corporation of India (NPCI) as part of institutions forming crucial financial infrastructure.
The guidelines are applicable to all commercial banks except regional rural banks, RBI said in notification today.
Accordingly, banks' investments in USEIL and NPCI will also be excluded from the aggregate capital market exposure ceiling of 40 per cent of net worth and direct investment ceiling of 20 per cent of net worth, till they are listed.
After listing, the exposure in excess of the original investment (ie, prior to listing) would form part of the capital market exposure, RBI said.
As per the earlier RBI guidelines, the exposure ceiling limit is 15 per cent of capital funds in case of a single borrower and 40 per cent of capital funds in the case of a borrower group. The capital funds for the purpose will comprise of Tier I and Tier II capital as defined under capital adequacy standards.
Credit exposure to a single borrower may exceed the exposure norm of 15 per cent of the bank's capital funds by an additional 5 per cent (ie, up to 20 per cent) provided the additional credit exposure is on account of extension of credit to infrastructure projects.
Credit exposure to borrowers belonging to a group may exceed the exposure norm of 40 per cent of the bank's capital funds by an additional 10 per cent (ie, up to 50 per cent), provided the additional credit exposure is on account of extension of credit to infrastructure projects.