New Delhi, Sept. 24 -- A six-year-old Reserve Bank of India (RBI) rule meant to keep a check on banks' lending to large corporate groups is once again causing heartburn for lenders.

The framework, last revised in 2019, limits how much banks can lend to a company and to a group of connected companies. The rule aims to avoid overexposure to any group and concentration of resources. Banks need to keep single-company exposure at 20% of their capital base, and a group of connected companies at 25%.

The sticking point is how RBI calculates the exposure. "RBI uses the higher of committed (sanctioned) credit lines or outstanding loans to arrive at exposure. Therefore, even if those loans remain undisbursed and unused, they add to the corporate ...