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Example1. Particulars Rs. Rs. in Crores

The document provides an example to illustrate exposure limits for bank lending. It shows that a bank's maximum exposure to an individual borrower is 25% of the bank's net worth of Rs. 700 crores, which is Rs. 175 crores. While a borrower was sanctioned total credit limits of Rs. 200 crores, for calculating exposure, non-fund based limits are considered at 50% of their value, bringing the total exposure to Rs. 150 crores, within the exposure limit norm.

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Mitika Tuteja
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33 views2 pages

Example1. Particulars Rs. Rs. in Crores

The document provides an example to illustrate exposure limits for bank lending. It shows that a bank's maximum exposure to an individual borrower is 25% of the bank's net worth of Rs. 700 crores, which is Rs. 175 crores. While a borrower was sanctioned total credit limits of Rs. 200 crores, for calculating exposure, non-fund based limits are considered at 50% of their value, bringing the total exposure to Rs. 150 crores, within the exposure limit norm.

Uploaded by

Mitika Tuteja
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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To illustrate the point let us consider the following example:-

Example1.
Particulars Rs. Rs. In
crores

Net worth of the bank 700

Maximum exposure permitted for an


individual borrower (25% of net worth of the 175
bank) Working Capital Control and Banking
Policy

657
Maximum exposure permitted for all
borrowers
350

under the same group (50% of net worth of


the bank)

Example1.
Particulars Rs.
Limits sanctioned to borrower

Fund Based 100

Non-Fund Based 100 100

Total 200 200

Total Exposure
100
For Fund Based limits
@ 50% of limits

For Non-Fund based limits 50 50


@ 50% of limits

Total 150

Total credit limits to the above borrower are Rs.200 crores which are in excess of the maximum
exposure norm of Rs. 175 crores. but for the purpose of determining exposure we have taken
non-fund based limits at 50 percent of itsvalue and total exposure is taken at 150 crores which is
well within the norm.

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