RBI amends Large Exposures Framework

Jun 04, 2019 | by Avantis RegTech Legal Research Team

Industry Specific Compliance

The Reserve Bank of India (RBI) on June 03, 2019, has made amendments in Large Exposures Framework (LEF) contained in Circulars DBR.No.BP.BC.43/21.01.003/2016-17 dated December 01, 2016 and DBR.No.BP.BC.31/21.01.003/2018-19 dated April 01, 2019. These revised guidelines are superseding the above mentioned Circulars. This Notification will come into effect from April 01, 2019 and non-centrally cleared derivatives exposures will become applicable with effect from April 01, 2020.

In order to capture exposures and concentration risk more accurately and to align the above instructions with international norms, the following amendments have been incorporated in the above mentioned instructions:

i) Exclusion of entities connected with the sovereign from definition of group of connected counterparties.

ii) Introduction of economic interdependence criteria in definition of connected counterparties.

iii) Mandatory application of look-through approach (LTA) in determination of relevant counterparties in case of collective investment undertakings, securitisation vehicles and other structures.

[Notification No. DBR.No.BP.BC.43/21.01.003/2018-19]


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