The Basel Committee on Banking Supervision has said that India is compliant regarding regulation on large exposures though, in some some respects, regulations are stricter than the Basel large-exposures framework.
In a report on assessment of large exposure regulations, it said India is compliant with the highest grade of regulation.
“Overall, as of 7 June 2019, the large exposures regulations in India are assessed as compliant with the Basel large exposures framework. This is highest possible grade,” a Basel panel report said. The large exposures framework applies to all scheduled commercial banks apart from regional rural banks. The framework became partially effective since April 2019 and the same circular was modified in June 2019.
“In some other respects, the Indian regulations are stricter than the Basel large exposures framework. For example, banks’ exposures to global systemically important banks are subject to stricter limits in line with the letter and spirit of the Basel Guidelines, and the scope of application of the Indian standards is wider than just the internationally active banks covered by the Basel framework,” the report said.
The report says from April 2020 onwards, the obligation to assess the connectedness based on economic interdependence and the inclusion of non-centrally cleared derivatives exposures in calculation of the large exposure limits will also enter into force as per the revised circular.
The four-phased assessment began in early 2018 and started with self-assessment by the RBI, followed by an on-site assessment where the team met the officials of the RBI and rating agencies, a review and finally a desk assessment of the draft regulation.