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As per the recent notification of the Reserve Bank of India, what is the limit for Urban cooperative banks (UCBs), to lend to a single borrower?
A)
30% of tier-I capital
B)
25% of tier-I capital
C)
20% of tier-I capital
D)
15% of tier-I capital

Correct Answer :   15% of tier-I capital


The Reserve Bank of India (RBI) the single borrower and group exposure limit for Urban cooperative banks (UCBs) to 15% and 25% of tier I capital, respectively.
This reduction in limit is to mitigate concentration risks arising out of large loans. Existing norms allowed 15% for single borrowers and 40% to group exposures of a bank’s total capital (tier I and tier II capital). The banks will have to bring their existing exposures to the new limits by 31 March 2023.

Published On : July 16, 2021
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