RBI : Maximum aggregated retail exposure to one counterparty increased


RBI : Maximum aggregated retail exposure to one counterparty increased

RESERVE BANK OF INDIA

RBI/2020-21/53
DOR.No.BP.BC.23/21.06.201/2020-21                                   October 12, 2020

All Scheduled Commercial Banks
(Including Small Finance Banks,
Excluding Local Area Banks and Regional Rural Banks)

Dear Sir/Madam,

Regulatory Retail Portfolio – Revised Limit for Risk Weight

Please refer to paragraph 5 of the Statement on Developmental and Regulatory Policies dated October 9, 2020 on the limit for regulatory retail portfolio.

2. In terms of para 5.9 on “Claims included in the Regulatory Retail Portfolios” of the Master circular No.DBR.No.BP .BC.1/21.06.201/2015-16 dated July 1, 2015 on Basel III Capital Regulations, claims (including both fund-based and non-fund based) that meet all the four criteria listed in paragraph 5.9.3 of the above Master Circular may be considered as retail claims for regulatory capital purposes and included in a regulatory retail portfolio. Claims included in this portfolio shall be assigned a risk-weight of 75 per cent, except as provided in paragraph 5.12 of above Master Circular for non-performing assets. ‘Low value of individual exposures’ is one of the four qualifying criteria which prescribed that the maximum aggregated retail exposure to one counterparty shall not exceed the absolute threshold limit of ` 5 crore.

3. In order to reduce the cost of credit for this segment consisting of individuals and small businesses (i.e. with turnover of upto ` 50 crore), and also to harmonise with the Basel guidelines, it has been decided that the above threshold limit of ` 5 crore for aggregated retail exposure to a counterparty shall stand increased to ` 7.5 crore from the date of this circular. The risk weight of 75 per cent will apply to all fresh exposures and also to existing exposures where incremental exposure may be taken by the banks upto the revised limit of Rs. 7.5 crore. The other exposures shall continue to attract the normal risk weights as per the extant guidelines. Illustrations are given in the Annex.

4. All other instructions applicable in terms of the Master Circular dated July 1, 2015 remain unchanged.

Yours faithfully,

(Prakash Baliarsingh)
Chief General Manager

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