Regulatory Alerts2025-01-01
Limitations on the Indebtedness of a Borrower and a Group of Borrowers
The Supervisor of Banks mandates strict limits on the total indebtedness of individual borrowers and borrower groups to banking corporations to mitigate credit risk concentration. Under these rules, a single borrower’s exposure cannot exceed 15 percent of a bank’s capital (10 percent for speculative activities), while aggregated group exposures are capped at 25 percent, with specific thresholds for banking, credit card, and controlled groups. The directive also defines credit risk components, permits deductions for approved collateral and guarantees, and requires banking institutions to establish internal exposure limits and board-approved procedures for identifying significant borrower relationships.
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