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RBI increases Bank’s Aggregate Exposure limit for Small Businesses

Published on October 15, 2020
Current Context: The Reserve Bank of India (RBI) has announced to increase the bank’s maximum aggregate retail exposure limit to small businesses (turnover upto Rs 50 crore) to Rs 7.5 crore.
RBI increases Bank’s Aggregate Exposure limit for Small Businesses
  • Earlier, this limit was Rs 5 crore. 
  • This enhancement in the limit will lead to an increase in credit flow for small businesses. 
  • The risk weight of 75% will apply to all fresh exposures as well as to existing exposures where incremental exposures may be taken by banks upto the revised limit i.e. upto Rs 7.5 crore.
  • Also, RBI has announced to extend the existing enhanced Held to Maturity (HTM) limit of 22% for SLR securities acquired between 1st Sep 2020 and 31st Mar 2021 and 31st Mar 2022. 
  • Thus banks may continue to hold such excess SLR securities in HTM category upto 31st Mar 2022. 
  • The enhanced HTM limit will be restored to 19.5% in a phased manner, beginning from the quarter ending of 30th June 2022. 
  • Static Part: 
    • HQ of RBI: Mumbai
    • Governor of RBI: Shaktikanta Das

Question: 

Q.1 RBI has raised bank’s aggregate exposure limit for small business from Rs 5 crore to Rs ___?
a. Rs 7.5 Crore
b. Rs 7 Crore
c. Rs 6.5 Crore
d. Rs 8 Crore
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