RBI caps group entity exposure limit for banks at 25%

The Reserve Bank of India said on Thursday it will cap banks' exposure to a single entity to 20% of a lender's capital base and to 25% limit to a group of connected entities, according to a circular on Thursday.

Currently, the RBI allows a bank to lend up to 15% of its capital funds to a single borrower and 40% to a group.

The central bank also said that banks must classify the sum of all exposures of 10% or above as "large exposure" and report them to the RBI.

The rules will be effective April 1, 2019.