The single borrower and group borrower exposure limits of banks have already been relaxed to allow for more funding for infrastructure by Indian banks. Taking into account the concentration risk and asset-liability mismatches, any further relaxation would be imprudent.
From regulatory point of view, interest rate derivatives – both OTC and exchange traded – have been allowed and these provide the opportunity to hedge the interest rate risk. Liquidity requirements on a broad SLR basis as also on a more granular basis are in place and banks’ positions are constantly monitored to ensure that mismatches are controlled.