Signals, Powered By EquityPandit
On Friday, Reserve Bank of India (RBI) has raised the group exposure limit of banks to 30 per cent from 25 per cent for a temporary period till 30 June, 2021. The announcement was made by Governor Shaktikanta Das in a televised address today. The limit will be restored to 25 per cent after the deadline unless the RBI decides otherwise.
Group exposure limit determines the maximum amount a bank can lend to one business house. This is done to prevent the troubles at entity having a spillover effect on the bank which could lead to a systemic risk. The RBI took the step today as various large business groups were finding it hard to raise money from banks in a tight money market, impacted by covid-19 crisis.
