The state own lender, State Bank of India has said that it exceeded the credit exposure limit set by the RBI on the loans to Reliance Industries Limited (RIL). This is for the fourth time that SBI has breached the norm in 4 years.
As per the norms of RBI, a lender cannot give more than 15% of its total loans to a single borrower, but can exceed this limit with prior board approval. SBI breached the norm on its loans to RIL, Indian Oil Corporation (IOC) and Bharat Heavy Electricals Limited (BHEL).
The lender however brought down the exposure limits to within normal by the end of the fiscal, but during certain periods of time, the exposure exceeded Rs. 500 crore for RIL, Rs. 3000 crore for BHEL loans, and as much as Rs. 4000 crore for loans to IOC.
SBI had previously exceeded the exposure limit in 2008-09 for RIL, and IOC; in 2009-10 the bank again exceededthe credit exposure limit for RIL, IOC, BHEL, Tata Group; 2010-11 also saw the bank exceeding the credit exposure for IOC, BHEL, and RIL.
RBI guidelines have capped a bank's exposure for a single borrower at 15%, a 5% relaxation for infrastructure projects and up to 40% for a borrower group, and additional 10% for infrastructure projects.
In January 2012, the bank exceeded the credit exposure limit of Rs. 14,779.58 crore and stood at Rs. 15,214.49 crore, while in February 2012, the sanction limit of Rs. 15,358.18 crore again exceeded the Rs. 14,783.26 crore ceiling.
Similarly the bank exceeded the limits on IOC, and BHEL loans on more than one occasions.