New NABARD Workshop - Last 4 year trend. March 5 at 5 PM. Register here

    Question

    As per the Large exposure framework, banks can have a

    maximum exposure up to 20% of ______, to a single borrower.
    A Deposit base Correct Answer Incorrect Answer
    B Loan book Correct Answer Incorrect Answer
    C Eligible capital Correct Answer Incorrect Answer
    D Total Assets Correct Answer Incorrect Answer
    E Net Income Correct Answer Incorrect Answer

    Solution

    As per the Large exposure framework, banks can have a maximum exposure up to 20% of of the bank’s available eligible capital base at all times , to a single borrower. In exceptional cases , Board of banks may allow an additional 5% exposure of the bank’s available eligible capital base, through Board approved policy. For group of connected counterparties, the sum of all the exposure values of a bank must not be higher than 25 % of the bank’s available eligible capital base at all times

    Practice Next

    Relevant for Exams: