Leading private sector lender HDFC Bank has “exceeded” the single-borrower limits prescribed by regulator RBI in case of its credit exposure to corporate giant Reliance Industries Ltd (RIL).
The bank, however, said its board of directors approved “the said excess in respect of this exposure” and it was within the 20 per cent ceiling of capital funds.
The central bank has fixed the credit exposure ceiling of a bank at 15 per cent of capital funds in case of a single borrower and at 40 per cent in case of a borrower group.
The RBI allows banks to enhance this exposure by further 5 per cent of capital funds in exceptional circumstances, with approval of their boards.
Without disclosing the exact amount of the exposure to Mukesh Ambani-led RIL, HDFC Bank said, “During the year ended March 31, 2015 the bank’s credit exposures to single borrowers and group borrowers were within the limits prescribed by the RBI except in case of Reliance Industries Limited, where the single borrower limits were exceeded.”
The Aditya Puri-led bank further said it had not exceeded these limits in the previous fiscal 2013-14.
Queries mailed to the bank’s spokesperson in this regard remained unanswered.
Incidentally, some other top lenders including private sector rival ICICI Bank and state-run SBI have also breached the RBI’s prudential limits in terms of their credit exposure to RIL in the past.
However, ICICI Bank has not breached these norms for four consecutive years now, including in the latest fiscal 2014-15.
SBI said it “had taken single borrower exposure in excess of prudential limits” in cases of three borrowers — Indian Oil, BHEL and Reliance Industries — during 2013-14, but this was within the discretion given by the RBI for additional 5 per cent exposure above the prudential limits.
SBI is yet to make any such disclosures for the last fiscal 2014-15.
The RBI’s permission to banks exceeding the prudential limits by up to 5 per cent, with approval of their boards, is “subject to the borrower consenting to the banks making appropriate disclosures in their Annual Reports.”