'RBI considering comments on bank exposure norms to group cos'
The Reserve Bank is examining the comments from stakeholders to firm up norms including on the issue of providing capital by the banks to their subsidiaries, the government said Friday.
New Delhi: The Reserve Bank is examining the comments from stakeholders to firm up norms including on the issue of providing capital by the banks to their subsidiaries, the government said Friday.
"The RBI is presently considering the comments received from the stakeholders to finalise the norms that also include the issue of providing capital by banks to their subsidiaries," the Minister of State for Finance Namo Narain Meena said in written reply to the Lok Sabha.
The Minister was responding to a query on whether the RBI is considering implementing guidelines on bank exposure to their own group non-financial and financial entities.
Aiming to avoid concentration of credit risk, the RBI in August proposed that a bank's exposure to its own group entities should not exceed 20 percent of the paid-up capital and reserves.
In case of all non-financial services companies and unregulated financial services companies taken together, the exposure should not exceed 10 percent of the paid-up capital and reserves, the RBI's draft guidelines on 'Management of Intra-Group Transactions and Exposures' (ITEs), it had said.
The central bank had sought comments on the draft guidelines by September 14.
The draft had been prepared in the light of experience gained in monitoring of identified financial conglomerates during last few years, RBI had said.
These guidelines had been proposed for all scheduled commercial banks, including foreign banks operating in India, belonging to a financial Group.