Money & Banking

RBI to exempt banks’ exposure to foreign sovereigns from LEF

Mumbai | Updated on February 24, 2021

The Reserve Bank of India (RBI) has decided to exempt scheduled commercial banks’ (SCBs) exposure to foreign sovereigns or their central banks from the large exposure framework (LEF).

Under LEF, a bank’s exposure to all its counterparties and groups of connected counterparties, excluding certain exposures, are considered for exposure limits.

RBI said exposures to foreign sovereigns or their central banks that are subject to a 0 per cent risk weight; and denominated in the domestic currency of that sovereign and met out of resources of the same currency of all SCBs to foreign sovereigns or their central banks are exempt from LEF.

The aforementioned SCBs excludes Small Finance Banks, Payments Banks, Local Area Banks and Regional Rural Banks.

Published on February 24, 2021

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