Large Exposures Framework - RBI

RBI/2019-20/178
DOR.No.BP.BC.43 /21.01.003/2019-20

March 23, 2020

All Scheduled Commercial Banks
(Excluding Regional Rural Banks)

Dear Sir/Madam,

Large Exposures Framework

Please refer to our circular No.DBR.No.BP.BC.43/21.01.003/2018-19 dated June 03, 2019 on the captioned subject.

2. In terms of para 7.13 of the circular, any Credit Risk Mitigation (CRM) instrument (e.g. SBLC/BG from Head Office/other overseas branch) from which CRM benefits like shifting of exposure/ risk weights etc. are not derived, may not be counted as an exposure on the CRM provider.

3. Banks have sought clarity on whether the above-mentioned guidelines will apply to exposures to a person resident outside India also. In this connection, it is clarified that the above clause will also apply to non-fund based credit facilities provided to a person resident outside India ie., the exposure can be reckoned on the person resident outside India instead of treating it as an exposure on Head Office/ other overseas branch, provided the transaction is otherwise compliant with Foreign Exchange Management (Guarantees) Regulations, 2000 (FEMA 8).

4. The exposures thus shifted to a person resident outside India, will attract a minimum risk weight of 150%.

5. It has been decided that non-centrally cleared derivatives exposures will be outside the purview of exposure limits till April 01, 2021.

Yours faithfully,

(Saurav Sinha)
Chief General Manager-in-Charge