SBI went past RBI limit in sanctioning corporate loans

New Delhi: Exceeding RBI's limit on exposure to single borrower, State Bank of India sanctioned loans to corporates such as RIL, IOC, Tatas and HDFC in the past three financial years, the Lok Sabha was informed today.

Bank of India also went past the Reserve Bank limit in the last two fiscals and sanctioned Rs 2,819 crore to HDFC, over the prescribed limit of Rs 2,730 crore in 2009-10.

Besides, it gave Rs 405 crore above the limit to SIDBI.

In a written reply, Minister of State of Finance Namo Narain Meena said the country's largest lender SBI inched past the limit to Reliance Industries and Indian Oil Corporation in all the years starting 2008-09; to BHEL in 2009-10 and 2010-11 and to the Tata Group in 2009-10.

However, Meena said, "As part of financial sector liberalisation, all the credit related matters of banks have been deregulated by the RBI and are governed by the bank's own lending policies."

Banks have to consider different loan proposals as per their commercial judgement and merits of each case keeping in view the loan policies approved by the Board of Directors, he added.

Meena said SBI has informed that in exceptional circumstances RBI permitted banks to consider enhancement of the exposure to a borrower/group up to a further five percent of capital funds with the approval of the Board.

Source: Financial Express