Lesson-10 on Credit

Question: What is Large Loan?

Answer:

Loan sanctioned to any individual or enterprise or any organization of a group amounting to 10% or more of a bank's total capital shall be considered as large loan.

Question: What are the maximum allowable limits of sanctioning Large loan of the Bank?

Answer:

The banks will be able to sanction large loans as per the following limits set against their respective classified loans:

Rate of net classified loans	The highest rate fixed for large loan against bank's total loans & advances
Upto 5%	56%
More than 5% but upto 10%	52%
More than 10% but upto 15%	48%
More than 15% but upto 20%	44%
More than 20%	40%

Question: What are the rules for Single Borrower Exposure limit for customer for allowing Loans & Advances?

Answer:

(a) The total outstanding financing facilities by a bank to any single person or enterprise or organization of a group shall not at any point of time exceed 35% of the bank's total capital subject to the condition that the maximum outstanding against fund based financing facilities (funded facilities) do not exceed 15% of the total capital. In this case total capital shall mean the capital held by banks as per section-13 of the Bank Company Act, 1991.

(b) Non-funded credit facilities, e.g. letter of credit, guarantee etc. can be provided to a single large borrower. But under no circumstances, the total amount of the funded and non-funded credit facilities shall exceed 35% of a bank's total capital.

However, in case of export sector single borrower exposure limit shall remain unchanged at 50% of the bank's total capital. But funded facilities in case of export credit shall also not exceed 15% of the total capital.

Question: What is the maximum time limit for addressing application of rescheduling loan of a customer?

Answer:

The Bank must address the application along with required down payment for rescheduling within (03) three months of receipt.

Related post