New Delhi: HDFC Bank’s single borrower limits prescribed by the Reserve Bank of India (RBI) in the case of credit exposure to the corporate giant Reliance Industries Ltd (RIL).
The private sector lender, however, said its board approved “the excess in respect of this exhibition”, and was within the ceiling of 20 percent of capital funds.
The central bank has set a maximum limit of credit exposure of a bank at 15 percent of capital funds in case of a single borrower and 40 percent in the case of a borrower group.
The RBI allows banks to improve this exhibition by more than 5 percent of capital funds in exceptional circumstances, with the approval of their boards.
Without disclosing the exact amount of exposure to lead by Mukesh Ambani, “During the year ended March 31, 2015 credit bank exposures to individual borrowers and borrowers in the group were within limits prescribed by the RBI, except in case of Reliance Industries Limited, where individual borrower limits were exceeded. ” said HDFC Bank
HDFC Bank spokesman later said the bank has fully acted within the regulations.
He said: “The regulatory guidelines specifically facilitate single borrower limit for taking up from 15 percent to 20 percent of net owned funds of the bank subject to approval by the Board and disclosed in the annual report after taking the consent the borrower for such disclosure. ”
Indeed, some other major lenders including ICICI Bank and SBI state have also violated RBI prudential limits in terms of their exposure to RIL in the past.
However, ICICI Bank has not violated these standards for four consecutive years now, even in the last fiscal year 2014-15.