The Reserve Bank of India has amended the Large Exposures Framework (LEF) to broaden the set of exposures that are excluded from banks’ exposure limits where they arise from shortfalls in meeting priority sector lending targets. Under the LEF, deposits maintained with the National Bank for Agriculture and Rural Development (NABARD) on account of such shortfalls were already exempt. The exemption has now been extended to contributions made by scheduled commercial banks to funds with the National Housing Bank (NHB), Small Industries Development Bank of India (SIDBI), MUDRA Ltd., or any other entity specified by the Reserve Bank of India, where the contribution is on account of a priority sector lending shortfall. The change applies to all scheduled commercial banks excluding regional rural banks and is effective immediately.
Reserve Bank of India 2025-06-09
Reserve Bank of India expands Large Exposures Framework exemptions to priority sector shortfall contributions
The Reserve Bank of India has amended the Large Exposures Framework to expand exemptions from banks' exposure limits for shortfalls in priority sector lending targets. Exemptions now include contributions to funds with the National Housing Bank, Small Industries Development Bank of India, MUDRA Ltd., or other specified entities. This change applies to all scheduled commercial banks, excluding regional rural banks, and is effective immediately.