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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

RBI updates Reserve Bank of India (Commercial Banks - Concentration Risk Management) Directions, 2025

01-Jan-2026 | RBI/DOR/2025-26/158 DOR.CRE.REC.77/07-03-001/2025-26

RBI has updated the Reserve Bank of India (Commercial Banks - Concentration Risk Management) Directions, 2025.

Key Highlights:
1. Definitions in Chapter I are revised -
a. "Eligible capital base" for LEF now includes post-balance sheet Tier I capital infusion and current-year profit for Indian banks.
b. The definition of "Group" for intra-group transactions is revised.
c. Exposures to own overseas branches/HO are excluded from intra-group exposure limits except for proprietary derivatives.
d. Paragraphs (4(4), 4(9), 4(11), 4(12)) are deleted.
2. Chapter II updated - Banks must now have strong policies to manage concentration risk for large counterparties, groups, sectors, and highly leveraged large borrowers across the banking system.
3. Chapter III (Large Exposures Framework) revised -
a. Exposures of foreign bank branches in India to their head office or overseas branches now fall under counterparty limits.
b. New limits: -
i) Foreign G-SIB branches - 20% limit on exposures to HO/G-SIBs; 25% for others.
ii) Foreign non-G-SIB branches - 25% on HO/non-G-SIBs; 20% on G-SIBs.
iii) Such exposures must always be calculated on a gross basis.
4. Chapter VI (Intra-Group Transactions & Exposures) updated:
a. Exposure value must include all credit and investment exposures but exclude equity and regulatory capital instruments.
b. Limits now based on eligible capital base, not paid-up capital and reserves.
c. Existing breaches of ITE limits must be corrected within 6 months.

Kindly refer to the attached document for more information.

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