RBI gives clarification on Large Exposures Framework

Mar 26, 2020 | by Avantis RegTech Legal Research Team

Finance & Taxation Compliance

The Reserve Bank of India (RBI) on March 23, 2020, has clarified that the guidelines of Large Exposure Framework (LEF) published dated June 03, 2019, shall apply to exposures to a person resident outside India. The Para 7.13 of the Circular specifies that any Credit Risk Mitigation (CRM) instrument from which CRM benefits like shifting of exposure or risk weights etc. are not derived, may not be counted as an exposure on the CRM provider.

Thus, it is clarified that the above clause will also apply to non-fund based credit facilities provided to a person resident outside India that is the exposure can be reckoned on the person resident outside India instead of treating it as an exposure on Head Office or other overseas branch, provided the transaction is otherwise compliant with Foreign Exchange Management (Guarantees) Regulations, 2000. It has been decided that non-centrally cleared derivatives exposures will be outside the purview of exposure limits till April 01, 2021.

[Notification No. DOR.No.BP.BC.43 /21.01.003/2019-20]


Related Updates

Alternate Text

Get updates on the go on RuleZbook Mobile App.