Featured Product

    RBI Revises Large Exposures Framework for Banks

    June 03, 2019

    RBI has introduced certain amendments to the large exposures framework, which went into effect on April 01, 2019. Annex to the circular contains the revised guidelines, which supersede any earlier circulars that have been issued. The guidelines in the framework have come into effect from April 01, 2019 (as specified in a circular dated December 01, 2016), except guidelines in respect of paragraph 2(ii) (contained in paragraphs 6.2(b), 6.7, 6.8, 6.9, and 6.10 of the Annex) and non-centrally cleared derivatives exposures, which will become applicable with effect from April 01, 2020.

    The recent amendments capture exposures and concentration risk more accurately and align the instructions with international norms. The amendments include the following:

    • Exclusion of entities connected with the sovereign from definition of group of connected counterparties
    • Introduction of economic interdependence criteria in definition of connected counterparties
    • Mandatory application of look-through approach in determination of relevant counterparties, in case of collective investment undertakings, securitization vehicles, and other structures

    Banks must apply the large exposures framework at the same level as the risk-based capital requirements are applied—that is, a bank shall comply with the norms at both the consolidated (Group) and solo levels. The application of the framework at the consolidated level implies that a bank must consider exposures of all the banking group entities (including overseas operations through branches and subsidiaries), which are under regulatory scope of consolidation, to counterparties and compare the aggregate of those exposures with the banking group’s eligible consolidated capital base. Appendix 1 for the large exposures framework contains the reporting template for large exposures. The reporting template covers the following:

    • All exposures, measured as specified in paragraphs 7, 8, 9 and 10 of this framework, with values equal to or above 10% of the bank’s eligible capital (that is, meeting the definition of a large exposure as per para 4.1 above)
    • All other exposures, measured as specified in paragraphs 7, 8, 9 and 10 of this framework without the effect of credit risk mitigation, with values equal to or above 10% of the bank’s eligible capital base
    • All the exempted exposures (except intraday inter-bank exposures) with values equal to or above 10% of the bank’s eligible capital base
    • Twenty largest exposures included in the scope of application, irrespective of the values of these exposures, relative to the bank’s eligible capital base


    Effective Date: April 01, 2019/April 01, 2020

    Keywords: Asia Pacific, India, Banking, Large Exposures, Concentration Risk, Basel III, Credit Risk, RBI

    Featured Experts
    Related Articles

    EBA Publishes Final Regulatory Standards on STS Securitizations

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.

    September 20, 2022 WebPage Regulatory News

    ECB Further Reviews Costs and Benefits Associated with IReF

    The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.

    September 15, 2022 WebPage Regulatory News

    EBA Publishes Funding Plans Report, Receives EMAS Certification

    The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).

    September 15, 2022 WebPage Regulatory News

    MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures

    The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.

    September 15, 2022 WebPage Regulatory News

    BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules

    The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.

    September 15, 2022 WebPage Regulatory News

    IOSCO Welcomes Work on Sustainability-Related Corporate Reporting

    The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)

    September 15, 2022 WebPage Regulatory News

    BoE Allows One-Day Delay in Statistical Data Submissions by Banks

    The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.

    September 14, 2022 WebPage Regulatory News

    ACPR Amends Reporting Module Timelines Under EBA Framework 3.2

    The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.

    September 14, 2022 WebPage Regulatory News

    ECB Paper Discusses Disclosure of Climate Risks by Credit Agencies

    The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)

    September 13, 2022 WebPage Regulatory News

    APRA to Modernize Prudential Architecture, Reduces Liquidity Facility

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.

    September 12, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8514