Single borrower limits of banks

(1) The aggregate amount of unsecured loans, advances and extensions of credit granted by a licensed bank to a person or to a borrower group shall not exceed fifteen per centum of the fully paid-up capital and reserves in the case of a local bank, or of the assigned capital and reserves in the case of a licensee that is a (2) Except with the permission in writing of the Central Bank, the aggregate amount of all loans, advances and extensions of credit granted by a licensed bank to a person or to a borrower group shall not exceed twenty-five per centum of the fully paid-up capital and reserves in the case of a local bank, or of the assigned capital and reserves in the case of a licensee that is a foreign bank. (3) The aggregate amount of all loans, advances and extensions of credit approved under sub-section (2) shall not exceed six times the fully paid-up capital and reserves in the case of a local bank, or of the assigned capital and reserves in the case of a licensee that is a foreign bank. (4) Where a licensee is in contravention of the limits referred to in sub-section (2) or (3), the Central Bank may require the licensee to reduce the loans, advances and extensions of credit to the person or borrower group triggering the contravention to the level where the limit is not exceeded, or increase its capital pursuant to section 37 so that the limit is not exceeded, or make one hundred percent loan loss provision for– (i) any amount in excess of Central Bank’s approved limit under sub- section (2); or (ii) any unauthorised amount in excess of twenty-five per centum of the bank’s fully paid-up capital and reserves in the case of a local bank, or of the assigned capital and reserves in the case of a foreign bank. (5) The limitations contained in sub-sections (1) and (2) shall not apply to– (a) loans, advances and extensions of credit to the (b) loans, advances and extensions of credit fully secured by bonds, debentures, notes, treasury bills of the Government or by other such obligations fully guaranteed as to principal and interest by the Government; (c) loans, advances and extensions of credit fully secured by the Government; or (d) loans, advances and extensions of credit fully secured by a segregated and pledged deposit account in the lending bank.