SBI violates RBI norms on RIL loans

June 12, 2012

SBI temporarily exceeded RBI-set credit exposure limit for the consecutive 4th year in 2011-12 in case of loans given to Reliance Industries Limited (RIL).

It also infringed RBI’s single borrower exposure rules in case of loans to two state-run entities — Indian Oil Corp (IOC) and Bharat Heavy Electricals Ltd (BHEL).

The exposure was brought down within the RBI-prescribed limits for all the three borrowers (RIL, IOC and BHEL) at the end of the financial year on March 31, 2012

SBI surpassed the limit by about Rs 500 crore, Rs 4,000 crore, Rs 3,000 crore for certain periods in case of loans to RIL, IOC and BHEL respectively

At the end of the fiscal, the bank’s outstanding loan to RIL, IOC and BHEL was Rs 6,867.32 crore, Rs 24,374.33 crore and Rs 13,522.21 crore respectively, all within the RBI’s prudential single borrower exposure limits.

According to RBI Norms:

  • A bank can’t give loans in excess of 15 % of its capital funds to a single borrower, but can exceed this limit by 5 % in exceptional cases with prior approval of their boards
  • The exposure ceiling limits is fixed at 15 % of capital funds in case of a single borrower and 40 % of capital funds in the case of a borrower group
  • The credit exposure to a single borrower can extend up to 20 %, if the additional 5 % exposure is on account of extension of credit to infrastructure projects.
  • The credit exposure to borrowers belonging to a group may go up to 50 %, if the additional 10 per cent exposure is for credit to infrastructure projects
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