The Reserve Bank of India (RBI), on November 28, 2025, issued the Reserve Bank of India (Commercial Banks – Concentration Risk Management) Directions, 2025, to strengthen prudential safeguards against excessive concentration of exposures within the banking system. These Directions apply to all commercial banks except SFBs, PBs and LABs, and consolidate India’s large exposure framework, sectoral exposure norms, intra-group limits, interbank liability limits, and country-risk management principles in alignment with global standards such as the Basel Committee’s guidance on large exposures.
The framework introduces detailed definitions for determining aggregate sanctioned credit limits (ASCL), eligible capital base, group entities, large exposures, market instruments, qualifying CCPs, specified borrowers, and the Normally Permitted Lending Limit (NPLL). It sets out comprehensive rules for identifying connected counterparties, computing exposures (funded, non-funded, derivative, investment), applying prudential caps, and managing concentration risk on both sides of the balance sheet. The Directions also outline exposure ceilings for capital markets, intra-group transactions, interbank liabilities, and the disincentive mechanism for large borrowers exceeding NPLL thresholds.
Further, the Directions require banks to adopt board-approved policies relating to concentration-risk limits, connected-counterparty identification standards, sectoral thresholds, country-risk frameworks, intra-group exposure policies, and monitoring/review mechanisms. Prior instructions that conflict with this framework stand repealed or modified as specified.
[Notification No. RBI/DOR/2025-26/158]
