Specified borrower norms to hit banks with high current A/c-:- Equity Research

The Reserve Bank of India’s new norms for "specified borrowers" are likely to impact banks with higher current accounts, according to State Bank of India. SBI’s CASA stems more from savings accounts and not current account and is unlikely to be affected by the RBI’s directive for specified borrowers, said SBI Managing Director Parveen Kumar Gupta told CNBC-TV18. Under the new norms, the new class of borrowers like large corporates can only borrow half of their current exposure to the banking system. Gupta said the central bank is trying to reduce banking exposure to large borrowers and intends to develop and deepen bond markets. Under the new norms, which will come into effect from April 1, 2017, incremental exposure of banking system to a specified borrower beyond permitted lending cap will be deemed to carry higher risk. The risk will be recognised through additional provisioning and higher risk weights. A ‘specified borrower’ is one with an aggregate of the fund-based credit limits of more than Rs 25,000 crore at any time during FY18, Rs 15,000 crore at any time during FY19 and Rs 10,000 crore at any time from April 1, 2019.