The Indian banking system is at present subjected to the following prudential norms: Exposure Norms •  Exposure to a single borrower should not exceed 25% of the bank’s capital funds (i.e. paid up capital and free reserves). BIS Review 13/1999  –2–  •  Group exposure should not exceed 50% of the capital funds of the bank.
An additional 10% is allowed in respect of exposure to infrastructure projects (power, telecom, roads & ports). Connected Lending •  Section 20 of the Banking Regulation Act prohibits loans to directors or to any firm or company in which directors hold an interest.