The RBI said detailed guidelines on the measures will be issued by August-end
The RBI said detailed guidelines on the measures will be issued by August-end

RBI announces measures to open up liquidity for NBFCs

ANI | Updated: Aug 07, 2019 16:53 IST

Mumbai (Maharashtra) [India], Aug 7 (ANI): The Reserve Bank of India (RBI) on Wednesday announced two key measures to help non-bank financial companies (NBFCs) which are facing a severe liquidity squeeze.
The first is harmonisation of single counterparty exposure limit for banks' exposure to single NBFCs with the general single counterparty exposure limit. The central bank has decided to raise a bank's exposure limit to a single NBFC to 20 per cent of tier-I capital of the bank.
Under the revised guidelines on large exposure framework that came into effect from April 1, a bank's exposure to a single NBFC was restricted to 15 per cent of its tier-I capital. For entities in other sectors, the exposure limit is 20 per cent of tier-I capital of the bank which can be extended to 25 per cent by banks' boards under exceptional circumstances.
The second initiative deals with credit to the priority sector. The RBI has decided to allow bank lending to registered NBFCs (other than micro finance institutions) for on-lending to agriculture (investment credit) up to Rs 10 lakh, micro and small enterprises up to Rs 20 lakh and housing up to Rs 20 lakh per borrower (up from Rs 10 lakh at present) to be classified as priority sector lending.
Detailed guidelines on the above measures will be issued by the month-end, the RBI said in a statement. (ANI)

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