TYPES OF FUNDS-2

•Capital Market exposure refers to the percentage of a portfolio, invested in a particular type of security, market sector or industry.
It is also known as the exposure amount an investor can lose from the risks unique to a particular investment.
•Large Exposures Framework: The large exposures framework sets prudent limits to large exposures of banks, which may result in a concentration of its assets to a single counterparty or a group of connected counterparties.
•To address this concentration risk, RBI has fixed limits on bank exposures.
•As per current guidelines of RBI, a bank’s exposure to a single borrower is restricted to 15% and to a borrower group 40% of capital funds.