exposure norms
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for VIDEO LECTURES OF ASHISH SIR (FOR ALL SCALES) — Bank Promotions.
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Free sample — 8 of 65 rapid-fire Q&A cards.
What is meant by 'exposure' in the context of bank lending?
Exposure refers to the total credit risk a bank undertakes with a single borrower or group of borrowers, including funded and non-funded credit facilities such as loans, guarantees, and letters of credit.
What is the prudential exposure limit for a bank's exposure to a single borrower as a percentage of capital funds?
20% of capital funds for a single borrower
What is the single borrower exposure limit prescribed by RBI for Indian banks?
RBI prescribes a single borrower exposure limit of 15% of the bank's capital funds (Tier I + Tier II capital), which may be extended to 20% if the additional exposure is for infrastructure financing.
What is the enhanced single borrower exposure limit allowed with board approval for infrastructure projects?
25% of capital funds for infrastructure borrowers
What is the group borrower exposure limit set by RBI?
The group borrower exposure limit is 40% of a bank's capital funds, extendable to 50% if the additional exposure is for infrastructure projects within the group.
What is the group borrower exposure limit as a percentage of capital funds prescribed by RBI?
40% of capital funds for a borrower group
What are 'capital funds' for the purpose of computing exposure norms?
Capital funds for exposure norms comprise Tier I capital (paid-up equity, statutory reserves, disclosed free reserves) and Tier II capital (revaluation reserves, hybrid instruments, subordinated debt), as per the bank's latest audited balance sheet.
What does the Large Exposure Framework (LEF) cap exposure to a single counterparty at?
15% of Tier I capital under LEF
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