RBI’s decision today to rationalise the prudential norms for the banking sector’s capital exposure into the capital market is not expected to impact the capital flow in real terms. However, the mid-term review of credit policy for the year 2005-06 would help the banks to have a clear picture on the banks aggregate and direct exposure into the capital market. Earlier, the apex bank had allowed banks to have an exposure of 5 per cent of their total advance into the capital market. RBI has proposed to restrict bank’s aggregate capital market exposure to 40 per cent of the net worth.
