Master Circular on Exposure Norms – July 2013

What changed

This master circular supersedes the July 2012 version and incorporates all instructions issued up to June 30, 2013. It consolidates existing rules on credit exposure ceilings, capital market exposure components, and sectoral limits into one document. No new policy changes were introduced; it is purely a compilation exercise.

What it means for you

Banks now have a single reference document for all exposure norms, reducing compliance ambiguity. The circular reinforces existing limits on single/group borrower exposures and capital market linkages, requiring banks to review internal policies for alignment. Lenders must ensure their credit and investment portfolios adhere to these consolidated guidelines to avoid regulatory breaches.

What banks were required to do at the time

• Review your bank's current exposure policies against the master circular to ensure compliance with updated limits.
• Update internal risk management and audit committee procedures to reflect the consolidated norms.
• Train credit and investment teams on the unified framework, especially capital market exposure definitions.
• Monitor sectoral exposure limits (e.g., leasing, hire purchase) and adjust lending strategies accordingly.

Who it affects

All scheduled commercial banks (excluding RRBs), Credit risk and compliance departments, Investment and treasury teams handling capital market exposure, Borrowers with large credit limits (individual/group)