With an aim to increase credit supply to the crisis-ridden shadow banking sector, the Reserve bank of India (RBI) has increased loan exposure limit of banks to a single non-banking financial company (NBFC) (excluding gold loan companies) from 15 per cent to 20 per cent of its capital base.
The Reserve bank of India also noted that bank finance to NBFCs predominantly engaged in lending against gold will continue to be governed by limits prescribed in circular.
According to the extant 'Large Exposures Framework (LEF)', banks' exposure to a single NBFC is restricted to 15 per cent of their available eligible capital base, while general single counter-party exposure limit is 20 per cent, which can be extended to 25 per cent by banks' boards under exceptional circumstances.