What changed
The exposure limit for a single borrower was raised from 15% to 25% of capital funds specifically for oil companies that have been issued oil bonds (non-SLR status) by the Government of India. Banks can also consider an additional 5% exposure in exceptional circumstances, as per existing provisions.
What it means for you
Banks can now lend more to oil companies holding government-issued oil bonds without breaching prudential norms, easing credit flow to the oil sector. This revision reflects RBI's recognition of the sector's unique funding needs and the government's support through bonds. Lenders must ensure that the enhanced exposure is only for eligible oil companies and that other exposure norms remain unchanged.
What you must do
- Update internal credit policies to reflect the revised single borrower limit of 25% for eligible oil companies with non-SLR oil bonds.
- Verify that oil companies claiming the higher limit have been issued oil bonds by the Government of India.
- Document any exceptional cases where exposure is extended beyond 25% up to 30%, ensuring compliance with existing guidelines.
- Monitor aggregate exposure to oil companies to avoid breaching other prudential limits.
Who it affects
All scheduled commercial banks (excluding RRBs), Oil companies that have received government-issued oil bonds, Credit risk and compliance teams at banks
Does this new limit apply to all oil companies?
No, it applies only to oil companies that have been issued oil bonds (which do not have SLR status) by the Government of India.
Can we go beyond 25% exposure for these oil companies?
Yes, in exceptional circumstances, banks may consider an additional 5% of capital funds, as per the existing provisions in the Master Circular.
Are other exposure norms affected by this change?
No, all other instructions in the Master Circular on Exposure Norms remain unchanged.