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India's central bank eases limits on credit for nonbank lenders

Latest step aims to bolster flagging consumers, but analysts have doubts

The Reserve Bank of India, the country's central bank, has taken steps to increase the flow of funds to the financial sector as it battles a slowing economy.   © Reuters

MUMBAI -- The Reserve Bank of India has eased limits on bank lending to the country's troubled nonbank sector. The central bank hopes to increase liquidity and fuel consumer demand as economic growth falls to a six-year low.

The central bank increased banks' loan exposure limit to any one nonbank institution to 20% of core capital, up from 15%. The limit can be raised to 25% by bank boards under exceptional circumstances, the Reserve Bank of India said in a recent statement.

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