Chapter II: Developments in Commercial Banking (Part 4 of 4) - আৰবিআই - Reserve Bank of India
Chapter II: Developments in Commercial Banking
(Part 4 of 4)
Old Private Sector Banks
2.37 The gross as well as net NPAs of old sector banks recorded a decline during 1999-2000 due to the increase in standard assets from 86.9 per cent in 1998-99 to 88.8 per cent in 1999-2000. Gross NPAs to total advances of old private sector banks declined from 13.1 per cent in 1998-99 to 11.3 per cent in 1999-2000. Net NPAs to net advances also declined from 9.0 per cent in 1998-99 to 7.3 per cent in 1999-2000. Gross NPAs to total assets of these banks declined from 5.8 per cent in 1998-99 to 5.1 per cent in 1999-2000 and net NPAs to total assets also declined from 3.6 per cent in 1998-99 to 3.2 per cent in 1999-2000 (Appendix Table II.8(C)). The distribution of Net NPAs of old private sector banks indicates that 1 bank recorded above 20 per cent net NPAs in 1999-2000 as against 3 in 1998-99. The number of banks recording net NPAs up to 10 per cent increased to 18 in 1999-2000 from 17 in 1998-99. The number of banks above 10-20 per cent range continued to remain at 5 in 1999-2000 (Table II.30).
New Private Sector Banks
2.38 The new private sector banks continued to maintain the highest share (95.9 per cent) of standard assets to total advances during 1999-2000 as compared to all other bank groups. Gross NPAs to gross advances of these banks declined from 6.2 per cent in 1998-99 to 4.2 per cent in 1999-2000. Net NPAs to net advances declined substantially from 4.5 per cent in 1998-99 to 2.9 per cent in 1999-2000. Gross NPAs to total assets declined from 2.3 per cent in 1998-99 to 1.6 per cent in 1999-2000. Similarly, net NPAs to total assets also declined from 1.6 per cent in 1998-99 to 1.1 per cent in 1999-2000. All the new private sector banks (8) had registered net NPAs below 10 per cent in 1999-2000 (Table II.30).
Foreign Banks
2.39 The NPA ratios of foreign banks also showed declines during 1999-2000 mainly on account of a decline in sub-standard assets. The share of sub-standard assets to total advances declined from 4.0 per cent in 1998-99 to 2.9 per cent in 1999-2000. The gross NPAs to gross advances of foreign banks declined from 7.6 per cent in 1998-99 to 7.0 per cent in 1999-2000 and the net NPAs to net advances also showed a decline from 2.9 per cent in 1998-99 to 2.4 per cent in 1999-2000. Gross NPAs to total assets increased from 3.1 per cent in 1998-1999 to 3.2 per cent in 1999-2000 while net NPAs to total assets declined from 1.1 per cent in 1998-99 to 1.0 per cent in 1999-2000. The details are given in Appendix Tables II.8(E) and II.8(F). In the case of foreign banks, the number of banks reporting net NPAs as percentage of Net Advances above 20 per cent increased to 4 in 1999-2000 from 3 in 1998-1999. The number of banks having this ratio in the range of 10-20 per cent declined to 7 in 1999-2000 from 11 in 1998-99. The number of banks with net NPAs ratio up to 10 per cent increased to 31 in 1999-2000 from 27 in 1998-99 (Table II.30).
Incremental Non-Performing Assets
2.40 A number of prudential measures have been undertaken in recent years to reduce the non-performing assets of the banking sector. Reflecting this, the incremental NPAs showed a distinct improvement during 1999-2000. An analysis of the incremental gross and net NPAs shows that gross as well as net NPAs as percentage of total assets and gross and net advances among the major bank groups suggest there has been a uniform decline in these ratios during 1999-2000. The ratio of incremental gross NPAs as percentage of incremental gross advances of SCBs declined from 16.9 per cent in 1998-99 to 2.8 per cent in 1999-2000 while the ratio of net NPAs to net advances declined from 10.3 per cent in 1998-99 to 2.7 per cent in 1999-2000. The ratio of incremental gross and net NPAs to total assets in the case of SCBs declined from 5.1 per cent and 2.7 per cent respectively in 1998-99 to 1.3 per cent each in 1999-2000. In the case of foreign banks, the incremental gross NPAs as percentage of total assets increased from 3.3 per cent and in 1998-99 to 4.1 per cent in 1999-2000 while net NPAs to total assets declined from 1.7 per cent in 1998-99 to (-) 0.4 per cent in 1999-2000 (Table II.31). In absolute terms incremental gross NPAs of SCBs amounted to Rs.2,118 crore in 1999-2000 as compared to Rs.7,908 crore in 1998-99 while, net NPAs stood at Rs.2,131 crore in 1999-2000 as against Rs.4,260 crore in 1998-99. In the case of foreign banks the incremental gross and net NPAs amounted to Rs. 258 crore and Rs.(-) 22 crore respectively in 1999-2000 as compared to Rs. 381 crore and Rs. 200 crore in 1998-99 (Table II.32).
4. Capital to Risk-Weighted Assets Ratio
2.41 The position of capital adequacy ratio in respect of the PSBs improved marginally in 1999-2000. The capital adequacy ratios was above 10 per cent in the case of 22 banks,as compared to 21 banks in 1998-99, 9-10 per cent range in respect of 4 banks while the ratio remained below 4 per cent in the case of 1 bank (Indian Bank) (Table II.33). Two banks viz., Bank of Maharashtra and Syndicate Bank moved up from the 9-10 per cent CRAR range to the above 10 per cent range, while two other banks viz., Canara Bank and Indian Overseas Bank moved from above 10 per cent CRAR range to the 9-10 per cent range. The State Bank of India and its Associates continued to maintain CRAR in excess of 10 per cent during 1999-2000. Indian Bank continued to have a negative capital adequacy ratio. Out of the 18 nationalised banks having positive CRAR, 9 banks recorded increases in the ratio. In the SBI Group, the State Bank of India recorded a decline in the ratio, while 6 of its 7 associates registered increases (Appendix Table II.9(A)).
2.42 The number of old private sector banks having capital adequacy ratios above 10 per cent increased to 19 in 1999-2000 from 18 in the previous year, while those having CRAR in the range 9-10 per cent remained stable at 2 in 1999-2000. The number of new private sector banks having CRAR in excess of 10 per cent continued to remain 7 in 1999-2000, while the number of foreign banks having CRAR above 10 per cent increased to 37 from 28 in 1998-99 (Table II.34). The capital adequacy ratios of individual banks belonging to the Indian Private sector bank group and foreign banks are given in Appendix Tables II.9 (B) and II.9 (C).
5. Regional Rural Banks
Mobilisation and Deployment of Funds
2.43 The outstanding deposits of Regional Rural Banks (RRBs) recorded a significant increase of 19.0 per cent from Rs.26,319.0 crore as on March 26, 1999 to Rs.31,306.0 crore as on March 24, 2000. On the assets side, bank credit showed an increase of 15.0 per cent from Rs.11,016.0 crore in 1998-99 to 12,663.0 crore in 1999-2000. The investments of RRBs continued to exhibit improvement during 1999-2000. Investments-deposits ratio increased from19.7 per cent in 1998-99 to 20.0 per cent in 1999-2000. The investment and credit to deposit ratio declined from 63.0 per cent in 1998-99 to 62.1 per cent in 1999-2000 (Table II.35).
Purpose-wise Disbursement of Loans and Advances
2.44 As on March 31, 1999, the loans and advances disbursed by RRBs for agriculture accounted for 46.3 per cent of the total advances. The major share of agricultural loans was in the form of short-term crop loans. As at end-March 1999, the short-term crop loans at Rs.1,756.6 crore constituted 68.6 per cent of agricultural advances while the share of term loans constituted 30.2 per cent. The share of non-agricultural advances viz., advances to rural artisans, village and cottage industries, retail trade and self-employed, etc., and others constituted 53.7 per cent of total loans and advances as at end-March 1999 (Table II.36).
Financial Performance of RRBs
2.45 For the year 1999-2000, of the 196 RRBs, the audited results are available for 193 RRBs. An analysis of the financial performance of RRBs indicates that there has been an improvement in terms of profitability. Out of 193 RRBs, the number of profit making banks stood at 160 in 1999-2000 as compared with 147 out of 196 in 1998-1999. The operating profits increased by 58.4 per cent from Rs.335.0 crore in 1998-99 to Rs.530.7 crore in 1999-2000. The net profits of these banks increased by 73.1 per cent from Rs.247.8 crore in 1998-99 to Rs.428.9 crore in 1999-2000 (Table II.37). The ratio of operating profits to total assets increased from 0.91 per cent in 1998-99 to 1.37 per cent in 1999-2000 and the ratio of net profit to assets total also increased from 0.67 per cent in 1998-99 to 1.11 per cent in 1999-2000. The increase in profits of RRBs could be primarily attributed to the rise in the ratio of interest income to total assets and partly to the decline in the ratio of intermediation cost to total assets. The spread of RRBs increased marginally from 3.16 per cent in 1998-99 to 3.53 per cent in 1999-2000.
Non-performing Assets
2.46 The RRBs showed significant improvement in terms of the reduction in their NPAs during 1998-99. The share of NPAs in total assets declined from 32.8 per cent as at end-March 1998 to 27.9 per cent as end-March 1999. The share of sub-standard, doubtful and loss assets declined during the year 1998-99. As a result, the share of standard assets increased from 67.2 per cent as at-end March 1998 to 72.2 per cent as at end-March 1999 (Table II.38).
6. Regional Spread of Banking
2.47 As a part of the ongoing financial sector reforms, banks have been given freedom in respect of opening up of new branches subject to the criteria laid down by the Reserve Bank. The number of branches of commercial banks increased to 65,340 as at end-June 2000 from 64,996 in the corresponding period of the previous year. The share of the southern region in the total number of branches constituted the maximum at 27.3 per cent, followed by the central region (20.4 per cent) (Appendix Table II.10 and 11).
7. Scheduled Commercial Banks’ Operations in Certificates of Deposit and Commercial Paper
Certificates of Deposit
2.48 During the financial year 1999-2000, owing to comfortable liquidity conditions brought about by large deposit growth and a cut in CRR effective May 1999, banks reduced their dependence on high cost deposits. The outstanding amount of certificates of deposit (CDs) issued by banks declined from Rs.3,494 crore as on April 9, 1999 to Rs.1,227 crore as on March 24, 2000. During the above period, the discount rates were in the range of 9.5 -11.0 per cent on CDs with a maturity of 3 months and were in the range of 9.75 - 12.50 per cent for those with a maturity of one year. As at the end of August 25, 2000, an amount of Rs.1,149 crore was outstanding and the typical discount rate for a 3 month maturity period was 10.25 per cent and that for a maturity period of 1 year was 10.50 per cent (Appendix Table II.12). With effect from May 3, 2000, in order to bring it at par with other instruments such as commercial paper and term deposits, the minimum maturity period of CDs was reduced to 15 days. Again, with a view to providing flexibility and depth to the secondary market, the restriction on transferability period for CDs issued by both banks and financial institutions stands withdrawn, effective October 10, 2000.
Commercial Paper
2.49 During the financial year 1999-2000, discount rate on commercial paper (CP) witnessed a divergent trend. Reflecting the liquidity conditions and the trend of declining interest rates in other segments of the money market, discount rates on CPs declined during the first half of the financial year 1999-2000. The weighted average discount rate on CP rose from 10.16 per cent in the fortnight ended April 15, 1999 to 10.30 per cent in the fortnight ended September 15, 1999 and further to 10.96 per cent during the fortnight ended October 31, 1999. Subsequently, with the easing of liquidity conditions, discount rates started falling and reached a level of 10.62 per cent in the fortnight ended March 31, 2000 and eased further to 9.55 per cent by the fortnight ended May 15, 2000. Subsequently, there was an all time increase in the range of discount rates of CPs (11.24 - 12.75 per cent) issued during the fortnight ended September 30, 2000.
2.50 The amount of primary issues of CPs increased substantially owing to the relatively low discount rates during most part of the year and a turnaround in manufacturing activity. The cumulative amount of primary issues of CP during 1999-2000 was Rs.31,126 crore as compared with Rs.24,721 crore in 1998-99. As a result, fortnightly average outstanding amount of CP during 1999-2000 was much higher at Rs.5,663 crore as compared with Rs.4,770 crore in the preceding year. The outstanding amount of CPs increased from Rs.6,311 crore as at the end of the first fortnight of July 1999 to a high of Rs.7,814 crore as on January 31, 2000 and declined steadily thereafter to reach the lowest level of Rs.5,606 crore as on April 30,2000. Subsequently, there was an increase in the outstanding amount of CPs at Rs.7,627 crore in the fortnight ended June 30, 2000, which continued till July end; gradually easing to Rs.5,931 crore as at September 30, 2000 (Appendix Table II.13). Manufacturing companies continued to account for bulk of CP issues, while the large amount of CPs were also held by banks.
8. Interest Rates of Scheduled Commercial Banks
Interest Rates
2.51 During the year July 1999-June 2000, there was a general softening of interest rates mainly on account of easing of monetary measures announced by the Reserve Bank. The banks revised both the Prime Lending Rates (PLRs) and domestic deposit rates in consonance with the reductions and later increase in the Bank rate, Reserve Bank repo rate and cash reserve requirements, during the year.
Lending Rates
2.52 The major PSBs reduced their Prime Lending Rates by 0.75 to 1.25 percentage points during the year 1999-2000. As at the end of September 2000, the PLRs of PSBs were in the range of 11.75 - 13.00 per cent and for all the scheduled commercial banks the PLRs were in the range of 10.00 - 17.50 percent as against 12.0 - 18.5 percent in September 1999 (Table II.39).
2.53 Prior to the measures announced in April 2000, Prime Term Lending Rate (PTLR) was generally less than PLR by 1.00 - 1.75 percentage points, which is now maintained at a difference of about 0.5 percentage points between the PLR and the PTLR. Since April 1999, as banks were given freedom to operate different PLRs for different maturities, 43 scheduled commercial banks, predominantly foreign and private sector banks, have so far reported introduction of tenor linked PLRs. The highest spread over PLR for majority of banks remained unchanged at 4.0 percentage points.
Domestic Deposit Rates
2.54 On the deposits side, the interest rate on saving accounts continues to be regulated. The rate was reduced from 4.5 to 4.0 per cent on April 1, 2000. The interest rates on term deposits softened during the year 1999-2000. Following the announcement of reduction in the Bank Rate, repo rate and CRR by 1.0 percentage point each in April 2000, there has been a general reduction in the deposit rates of most of the scheduled commercial banks across all maturities by 50 to 200 basis points.
2.55 Consequent upon the increase in the Bank Rate, and CRR on July 21, 2000, there was a fall in the range of deposit rates. At present, the deposit rates of scheduled commercial banks (PSBs) are in the range of 4.00- 8.50 per cent for maturity periods up to one year and 8.00 - 10.50 per cent for maturity period above one year (Table II.40).
2.56 An analysis of the range of PLR of SCBs indicates that the lower and upper bounds of this range for PSBs were lower in September 2000 than the levels of October 1999. However, as the upper bound fell more than the lower bound, PLR range declined. Similar figures for other bank groups indicate that private sector banks and foreign banks typically operated on much broader ranges for both periods under consideration. Further, the range of domestic term deposit rates of private and foreign banks were greater than those for PSBs. This could be reflective of the successful practising of price discrimination by private and foreign banks to increase their profits as also the wide divergences between the management, operations and services offered by individual banks in these bank groups.
(in per cent) |
||
|
|
||
Category of Banks |
Range of PLR |
|
October 1999 |
September 2000 |
|
|
|
||
Public sector Banks |
12.00 -13.50 |
11.75 - 13.00 |
Private Sector Banks |
10.50 - 17.50 |
10.25 - 15.50 |
Foreign Banks |
10.50 - 16.00 |
10.00 - 17.50 |
Range of Domestic Term Deposit Rates |
||
Public Sector Banks |
5.00 - 11.00 |
4.00 - 10.50 |
Private Sector Banks |
5.00 - 12.50 |
4.50 - 11.50 |
Foreign Banks |
4.00 - 12.50 |
4.00 - 12.00 |
|
|
||
9. Rural Credit and Priority Sector Lending
2.57 Further efforts were made during 1999-2000 to enhance the flow of rural credit. NABARD is the primary agency for co-ordinating and facilitating the extension of rural credit. Commercial banks supplement the efforts of NABARD and co-operative banks in meeting the credit requirements of rural India. The credit extended by Scheduled Commercial Banks (SCBs) primarily cover priority sector lending and the sponsoring of RRBs. The operation of RRBs has been discussed in section 4. Here the contribution of SCBs to rural credit is briefly discussed.
Bank Group-wise Distribution of Rural Credit
Priority Sector Advances by Public Sector Banks
2.58 As on the last reporting Friday of March 2000, the total priority sector advances of PSBs constituted 43.6 per cent of the Net Bank Credit (NBC) (Rs.1,27,807 crore) as against 43.5 per cent (Rs.1,07,200 crore) as on the last reporting Friday of March 1999. The agricultural advances of PSBs increased by Rs.6,112 crore (15.3 per cent) from Rs.40,078 crore as on the last reporting Friday of March 1999 (16.3 per cent of net bank credit) to Rs.46,190 crore as on the last reporting Friday of March 2000 (15.8 per cent of net bank credit). In the priority sector advances, the share of agriculture was maximum at 36.1 per cent as on the last reporting Friday of March 2000, followed by small scale industries (35.8 per cent) and the other priority sector advances (25.1 per cent) (Appendix Table II.14).
Priority Sector Advances by Private Sector Banks
2.59 Private sector commercial banks are also required to meet similar targets and sub-targets which are applicable to PSBs for lending to the priority sector. The total priority sector credit (provisional) extended by the private sector banks as on the last reporting Friday of March 2000 amounted to Rs.18,019 crore constituting 38.7 per cent of net bank credit provided by these banks as compared to Rs.14,155 crore as on the last reporting Friday of March 1999. The share of small scale industries was highest at 15.7 per cent of NBC, followed by other priority sector advances (13.9 per cent ) and agriculture (9.1 per cent) (Appendix Table II.15).
Priority Sector Advances by Foreign Banks
2.60 The foreign banks operating in India are required to fulfil an overall target of 32 per cent of net bank credit in lending to the priority sector, within which two sub-targets of 10 per cent for SSI and 12 per cent for exports have been stipulated. As on the last reporting Friday of March 2000, the total priority sector advances of foreign banks constituted 34.5 per cent of net bank credit provided by these banks. The export credit increased by 11.3 per cent from Rs.5,678 crore in March 1999 to Rs.6,322 crore in March 2000 and constituted 22.5 per cent of NBC. The credit provided to small scale industries increased by 16.7 per cent from Rs.2,460 crore in March 1999 to Rs.2,872 in March 2000 constituting 10.2 per cent of NBC (Appendix Table II.16).
Differential Rate of Interest (DRI) Scheme
2.61 The outstanding advances of the PSBs under the DRI scheme stood at Rs.432.82 crore as at the end of March 2000 which accounted for 0.18 per cent of the total outstanding advances of these banks as at end-March 1999.
The advances to SC/STs under DRI by the PSBs amounted to Rs.257.6 crore forming 59.5 per cent of total DRI advances as at end-March 2000 as against Rs.324.29 crore forming 63.8 per cent at end-March 1999.
Lead Bank Scheme
2.62 The main focus of the Lead Bank Scheme (LBS) is to enhance the proportion of bank finance to the priority sector. The objective of the scheme has been to coordinate the activities of banks and other developmental agencies to facilitate the flow of credit to the priority sector The LBS has covered 575 districts as on March 31, 2000 as against 567 districts as on March 31, 1999. During the year 1999-2000, 8 new districts have been formed as a result of reorganisation/ bifurcation and the lead responsibility in respect of these districts was allotted to PSBs. The sectoral targets set for the years 1998-99 and 1999-2000 under the Annual Credit Plan are given in Table II.42. As high as 96.7 per cent of the target was achieved during the year 1998-99. Sectorally, the achievement was 96.3 percent of the target in the case of agriculture and allied activities, 98.3 per cent in the case of small-scale industries, and 95.9 per cent in the case of services sector during the year 1998-99. The all India sector-wise data under Annual Credit Plan during 1998-99 and 1999-2000 are furnished in Table II.41.
Advances to Weaker Sections
2.63 The total advances to weaker sections provided by PSBs stood at Rs.19,244 crore, Rs.19,608 crore and Rs.21,145 crore as on the last reporting Friday of March 1999, September 1999 and March 2000, respectively. This worked out to 7.82 per cent, 7.71 per cent and 7.22 per cent, respectively of the net bank credit as against the stipulated target of 10 per cent.
PMRY- Performance of Banks from 1993-94 to 1999-2000
2.64 The Prime Minister’s Rozgar Yojana for Educated Unemployed Youth is an important rural employment programme for which banks provide financial assistance to the beneficiaries. The PMRY scheme aims at ameliorating the economic conditions of the unemployed youth throughout the country through various forms of financial/technical assistance. The progress under the scheme is given in Table II.42. The assistance provided by banks towards PMRY scheme showed a declining trend from 1996-97 onwards, both in terms of the number of cases and the amounts disbursed. Besides, the share of disbursements to sanctions continued to decline while the average size of loans sanctioned remained about Rs.60,316 during the period (Table II.42).
10 . Credit to Sick Industrial Units
2.65 The outstanding credit provided by Scheduled Commercial Banks as at the end of March 1999, in respect of sick Small-Scale Industrial Units (SSI) numbering 3,06,221 stood at Rs.4,313.48 crore. Of the 3,06,221 sick SSI units, banks have taken decisions regarding viability in respect of 2,89,885 units. Out of these, 18,692 units were found to be viable and their outstanding bank credit amounted to Rs.376.96 crores (i.e. about 8.74 per cent of the total amount). There were 2,71,193 non-viable units with outstanding bank credit of Rs.3,746.07 crore which accounted for 88.7 per cent and 86.85 per cent of the total sick SSI units and their outstanding bank credit, respectively. The banks have yet to decide on the viability of the remaining 16,336 units with outstanding bank credit of Rs.190.45 crore. Banks have extended assistance to 12,759 units with an outstanding credit of Rs.194.91 crore under the nursing programme.
(Amount in Rs. crore) |
|||||
|
|
|||||
Year |
Target |
Sanctions |
Disbursements |
||
|
|
|||||
(Number of |
|||||
youth) |
No. of youth |
Amount |
No. of youth |
Amount |
|
|
|
|||||
1 |
2 |
3 |
4 |
5 |
6 |
|
|
|||||
1993-94 |
42,040 |
30,029 |
188.55 |
23,060 |
137.15 |
1994-95 |
2,39,215 |
1,85,803 |
1,054.99 |
1,58,863 |
872.67 |
1995-96 |
3,21,360 |
2,87,218 |
1,678.88 |
2,41,485 |
1,378.80 |
1996-97 |
3,07,163 |
2,71,768 |
1,653.06 |
2,28,496 |
1,352.16 |
1997-98 |
3,45,000 |
2,63,622 |
1,592.02 |
2,09,103 |
1,218.27 |
1998-99* |
3,54,350 |
2,72,704 |
1,624.89 |
1,89,850 |
1,082.92 |
1999-2000* |
3,54,450 |
2,50,544 |
1,562.90 |
1,37,774 |
825.95 |
Total |
19,63,578 |
15,61,688 |
9,419.49 |
11,88,991 |
6,867.92 |
|
|
|||||
Note: * Provisional |
|||||
11. Audit Command Language
2.66 Audit Command Language (ACL) is a powerful auditing software that allows the user to download data from any platform and interrogate the downloaded data without modifying the downloaded data in any way. A major training programme on ACL was started by the Reserve Bank with the support of outside consultants from March 2000. The training programme is being conducted in two phases viz. introductory and advanced. Phase II will result in development of at least 100 Computer Assisted Audit Techniques (CAATs) which will be documented and made available to all regional offices for future use during inspection of automated branches. The case studies and CAATs will broadly cover important areas, such as treasury, credit, off-balance sheet items, ALM, regulatory compliance etc. At present, the officers identified for Phase II advanced program are involved in the development of CAATs. The use of CAAT is expected to substantially increase over the next few years and will become a permanent tool in the armoury of bank supervisors in India.
Sub-Committee (Audit)
2.67 There was no change in the composition of the Sub-Committee (Audit) since its inception. The tenure of the Sub-Committee was extended up to March 27, 2001 or till the Central Board of the Reserve Bank is reconstituted whichever is earlier. The SubCommittee met twice during the period under review. To enable it to take a final decision with regard to the introduction of half-yearly review of accounts of PSBs, which the SubCommittee had been considering for some time, a Working Group was setup as indicated by the Sub-Committee to examine the feasibility/modalities of introducing half-yearly review of accounts of these banks. The Working Group has submitted its report in June 2000 and the Sub-Committee in its subsequent meeting decided to introduce from the half-year ended September 2001 a system of half-yearly review of accounts in these banks.
12. Frauds/Robberies in Banks
2.68 During the year 1999 (January-December), commercial banks (excluding RRBs) reported 3,185 cases of frauds involving an amount of Rs.640.04 crore. This includes 17 cases of frauds, involving an amount of Rs.117.20 crore, reported in the overseas branches during the same period. These cases were followed up with the banks for necessary remedial measures and fixing staff accountability. During the period 1999-2000 (July-June), 113 cases of robberies/dacoities involving an amount of Rs. 10.32 crore were reported by PSBs.
13. Y2K Compliance
2.69 The Year 2000 (Y2K) problem was a major supervisory challenge addressed by the financial system supervisors across the world. The preparations made by the banks and financial institutions were closely monitored and reviewed during the year. Year 2000 risk assessments, mitigation measures, validation processes and outcomes were documented and subjected to independent verification. Contingency plans conforming to the critical minimum parameterisation recommended by the Reserve Bank were drawn up for operationalisation in the event of system failure. Moreover, hard copies of all important books, including customer accounts and treasury operation, were prepared and kept in readiness to ease temporary switch over to manual processing in the event of need. With elaborate preparations, all banks and financial institutions have reported successful transition across the Century Date Change. Banks and financial institutions have reported a smooth leap year and financial year transition as well.
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