The ReserveBank of India granted small finance banks exemption from aregulatory ceiling on interbank borrowings until existing loans mature or untilthe loans reach a three-year period.
According to guidelines issued by the Indian central bankOct. 6, interbank borrowings will be at par with scheduled commercial banksafter the exemption period has passed.
The RBI clarified that borrowings made by small financebanks after commencement of operations will be subject to interbank borrowinglimits.
Small finance banks can purchase loan portfolios as standardassets for the purpose of meeting the 40% sub-target priority sector lending andare not allowed to purchase nonperforming loans.