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      Question

      As per the Large exposure framework, banks can have a

      maximum exposure up to 20% of ______, to a single borrower.
      A Deposit base Correct Answer Incorrect Answer
      B Loan book Correct Answer Incorrect Answer
      C Eligible capital Correct Answer Incorrect Answer
      D Total Assets Correct Answer Incorrect Answer
      E Net Income Correct Answer Incorrect Answer

      Solution

      As per the Large exposure framework, banks can have a maximum exposure up to 20% of of the bank’s available eligible capital base at all times , to a single borrower. In exceptional cases , Board of banks may allow an additional 5% exposure of the bank’s available eligible capital base, through Board approved policy. For group of connected counterparties, the sum of all the exposure values of a bank must not be higher than 25 % of the bank’s available eligible capital base at all times

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