RBI proposes limits for banks’ capital mkt exposure

The Reserve Bank of India (RBI) on Friday proposed limits to banks' lending against stocks, bonds in capital markets, and for corporate acquisitions to ensure that lenders keep such businesses in check.

- Reuters

RBI issued a draft circular proposing that banks' total direct exposure to capital markets and acquisition financing be capped at 20% of their tier-1 capital, weeks after it said it would ease restrictions on funding mergers and acquisitions.

Earlier this month, the regulator allowed banks to fund acquisitions and raised the cap on loans for buying shares at initial public offerings, as part of a raft of measures to boost bank lending in the world's fifth-largest economy.