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(^446) Financial Management
Total credit limits to the above borrower are Rs. 200 crores wihch are in excess of the
maximum exposure norm of Rs. 175 crores. But for the purpose of determining exposure
we have taken non-fund based limits at 50 per cent of its value and total exposure is
taken at 150 cores which is well within the norm.
As per a recent classification of Reserve Bank, loans and advances against
bankís own deposits may not be included while arriving at over all exposure to
a borrower.
Total exposure to group is permitted upto 60 per cent if the additional exposure
is on account of finance to infrastructure finance. However, exposure norm to
individual borrower remains restricted to 25% only even in such cases.
(ii) The turn over method, as already prevalent for small borrowers, may continue
to be used as a tool of assessment for this segment. For small scale and tiny
industries etc., this method of assessment may be extended upto total credit
limits of Rs. 2.00 crores as against existing cut-off point of Rs. 1.00 crore.
(iii) Banks may adopt cash budgeting system for assessing the working capital
finance in respect of large borrowers.
Reserve Bank of India has however, not suggested any specific form for
assessment of working capital based upon cash budgeting. ëKannan Groupsí
has given a form which may be adopted by the banks with suitable modifications.
In any case it has been left to the banks to evolve their own method/form for
this purpose.
(iv) The banks may also retain the concept of the present maximum permissible
bank finance with necessary modification or any other system as they deem
fit.
(v) Banks should lay down with due approval of their boards, transparent policy
and guidelines for credit dispensation in respect of each broad category of
economic-activity.
(vi) Rsserve Bankís instructions relating to directed credit (such as priority sector,
export etc.), quantitative limits on lending (such as against shares and for
consumer durables etc.) and prohibitions of credit (such as bridge finance, re-
discounting of bills earlier discounted by NBFCs etc.) shall continue to be in
force.
(ii) Non Fund Based^100
Total 200
Total Exposure
(i) For fund Based limits @ 100% of limits 100
(ii) For Non-funds Based limits @ 50% of limits 50
150