Whether any ceiling has been fixed on the banks exposure to the capital market?
A banks total exposure, including both fund based and non-fund based, to capital market in all forms covering its direct investment in equity shares, convertible bonds and debentures and units of equity oriented mutual funds; Advances against shared to individuals for investment in equity shares (including IPOs), bonds and debentures, units of equity-oriented mutual funds and secured and unsecured advances to stockbrokers and guarantees issued on behalf of stockbrokers and market makers should not exceed 5% of its total outstanding advances as on March 31 of the previous year (including Commercial Paper). Within the above ceiling, banks direct investment should not exceed 20 per cent of its networth. For computing the ceiling on exposure to capital market, the banks direct investment in shares will be calculated at cost price of the shares.
