SBI breaches RBI norm on RIL exposure by Rs 500 cr

State-run banking giant SBI has said it temporarily exceeded RBI-prescribed credit exposure limit for the fourth year in a row in 2011-12 with regard to loans given to Mukesh Ambani-led Reliance Industries (RIL).

During the fiscal ended March 31, 2012, State Bank of India (SBI) also breached RBI's single borrower exposure norms in case of loans to two state-run entities -Indian Oil Corp (IOC) and Bharat Heavy Electricals Ltd (BHEL).

[caption id="attachment_340220" align="alignleft" width="380" caption="As per RBI guidelines, the exposure ceiling limits are 15 percent of capital funds in case of a single borrower and 40 per cent of capital funds in the case of a borrower group. Reuters"][/caption]

The exposure was brought down within the RBI-prescribed limits for all the three borrowers (RIL, IOC and BHEL) at the end of the financial year on March 31, 2012, the country's largest bank has disclosed in its annual report for 2011-12.

SBI exceeded the limit by about Rs 500 crore in case of loans to RIL, while the limit was exceeded by about Rs 4,000 crore in case of IOC and by about Rs 3,000 crore for loans to BHEL for certain periods. At the end of the fiscal, the bank's outstanding loan to RIL stood at Rs 6,867.32 crore, Rs 24,374.33 crore to IOC and Rs 13,522.21 crore to BHEL -- all of which were within the RBI's prudential single borrower exposure limits.

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On the other hand, private sector banking giant ICICI Bank, which had also temporarily breached RBI's single borrower exposure norms in 2010-11 with respect to its loans to RIL, did not exceed the limits for any borrower in 2011-12.

"During the year ended March 31, 2012, the Bank has complied with the Reserve Bank of India guidelines on single borrower and borrower group limit," ICICI Bank said in its latest annual report.

As per RBI's prudential credit norms, a bank can't give loans in excess of 15 percent of its capital funds to a single borrower, but can exceed this limit by 5 per cent in exceptional cases with prior approval of their boards.

Detailing the cases where it breached prudential limits for single-borrower exposure during the fiscal ended March 31, 2012, SBI has named RIL, IOC and BHEL as three such borrowers in its annual report.

While SBI had exceeded RBI's limits for these three in 2010-11 as well, it had provided credit in excess of the prudential norms to RIL, IOC, BHEL and Tata Group in 2009-10. Prior to that, SBI exceeded prudential credit limits during 2008-09 with regard to its exposure to RIL and IOC.

As per RBI guidelines, the exposure ceiling limits are 15 percent of capital funds in case of a single borrower and 40 per cent of capital funds in the case of a borrower group However, the credit exposure to a single borrower can go up to 20 per cent, if the additional 5 percent exposure is on account of extension of credit to infrastructure projects.

Similarly, the credit exposure to borrowers belonging to a group may go up to 50 percent, if the additional 10 per cent exposure is for credit to infrastructure projects.

PTI