RBI Repeals Guidelines on Credit Supply for Large Borrowers

RBI has released Guidelines on Enhancing Credit Supply for Large Borrowers through Market Mechanism dated August 25, 2016. These guidelines were issued with a view to addressing the concentration risk of the banking system arising from its exposures towards a single counterparty.

The Guidelines disincentivised such large and highly leveraged borrowers for their incremental funding from the banking system beyond a threshold as also encouraged them to explore market-based resources for meeting their incremental financing needs.

On review, it has been observed that share of credit from the banking system to such large borrowers has reduced significantly since the introduction of the Guidelines and bank balance sheets have become more resilient. Accordingly, it has been decided to withdraw the Guidelines from April 1, 2026.

However, banks are advised to continue to monitor the risks arising to them from their exposures to ultra-large borrowers who are excessively leveraged and have substantial borrowings from the banking system. Banks may put in place suitable monitoring and risk management framework for such counterparties.

Further, the Large Exposures Framework as issued vide circular dated June 03, 2019 (updated from time to time) shall continue to be adhered to.

RBI Guidelines on Credit Supply for Large Borrowers 2016 👇