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RBI Lending Limits: Loan Caps and Exposure Norms

6 February 20251 min read
BANKING & FINANCERBI LendingLimits: Loan Capsand ExposureNorms6 February 2025safalsetu.com

Why in the news

RBI sets lending and exposure limits to protect financial stability and prevent fund misuse.

Key facts

  • Book-debt finance: for working capital limits of Rs 5 crore or more, capped at 75% of the sanctioned limit.
  • Volume control: RBI regulates total bank credit.
NormRule
Single borrower exposure15% of capital funds
Infrastructure projectsUp to 5 points above 15%
Exceptional casesExtra 5% of capital funds
Stock and commodity brokersNo bank credit
Borrower with another bank’s facilitiesNOC required

Exam angle

  • LTV – Loan to Value; NOC – No Objection Certificate.

Test yourself

1. What is the maximum cash loan payout allowed to NBFCs under the RBI financing limits noted here?

NBFCs are limited to cash loan payouts of Rs 20,000.

2. Under RBI norms, the credit exposure to an individual borrower cannot exceed what share of a lender's capital funds?

The basic exposure ceiling is 15% of capital funds.

3. What Loan to Value ratio must lenders maintain on loans against shares under these RBI restrictions?

Lenders must keep an LTV ratio of 50%.

This topic is part of Daily Current Affairs 6 February 2025 (14 topics).

All topics of the dayDay quizFebruary 2025

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