RBI raises banks’ aggregate exposure limit for small businesses

Reserve Bank of India (RBI) has raised the banks’ maximum aggregate retail exposure limit to entities with turnover up to Rs 50 crore to Rs 7.5 crore. Earlier this limit was Rs 5 crore. The decision has been taken to increase credit flow to small businesses. 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 up to the revised limit of Rs 7.5 crore.

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RBI has also decided to extend the existing enhanced Held to Maturity (HTM) limit of 22 per cent for SLR securities acquired between September 1, 2020, and March 31, 2021, up to March 31, 2022. This means that Banks may continue to hold such excess SLR securities in HTM category up to March 31, 2022. The enhanced HTM limit would be restored to 19.5 per cent in a phased manner, beginning from the quarter ending June 30, 2022.

Important takeaways for all competitive exams:

  • RBI 25th Governor: Shaktikanta Das; Headquarters: Mumbai; Founded: 1 April 1935, Kolkata.

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