Question

An Upper Layer NBFC (other than an Infrastructure Finance Company) can exceed its baseline single counterparty limit of 20%, up to a maximum of 25%, under what condition?

Q: Answer-An Upper Layer NBFC (other than an Infrastructure Finance Company) can exceed its baseline single co...

A standard Upper Layer entity can utilize a board-approved flexibility buffer of an additional 5 of its eligible capital base over the 20 baseline, provided that this extra credit exposure is strictly directed toward infrastructure development projects.

A Automatically if the counterparty holds an active international AAA credit rating

B With explicit Board approval, provided the additional 5% exposure is channeled into infrastructure loans or investments

C If the target counterparty belongs to a state-controlled public sector sovereign utility

D If the financing entity completely nets out its off-balance sheet derivative instruments

E Under no circumstances, as the 20% limit represents an absolute, unyielding structural ceiling

Practice Next

More Risk Management in Banks Questions

Suppose a customer's complaint is rejected because it is currently being formally heard and adjudicated before a state consumer disputes redressal commissi...
What structural limitation separates the power of the RBI Deputy Ombudsman from the principal RBI Ombudsman?
What are the two essential structural components that form a 52-character Unique Transaction Identifier (UTI)?
What is the maximum of credit risk borne by CGTMSE for guaranteed coverage under the CGTMSE scheme?
Legal Entity Identifier India Ltd (LEIL) operates as a wholly-owned subsidiary of which financial market infrastructure entity?
What happens if no resolution plan is approved by the CoC within the maximum time frame permitted under the IBC?
Before a customer can file a maintainable complaint with the RBI Ombudsman, how many days must they wait for a response after giving their first-level writ...
If external rating of a borrower is changes from A to BBB, how does risk weight change under Basel norms?
Which of the following is completely exempted from the application of the SARFAESI Act?
The revised Prompt Corrective Action (PCA) framework is primarily a tool designed by the regulator to manage financial stability. What type of mechanism do...

Hey! Ask a query

An Upper Layer NBFC (other than an Infrastructure Finance Company) can exceed its baseline single counterparty limit of 20%, up to a maximum of 25%, under what condition?

Detailed Solution

More Risk Management in Banks Questions

Hey! Ask a query

Please Register/Login