The National Bank for Agriculture and Rural Development (NABARD) has revised the Model Kisan Credit Card (KCC) Scheme to include investment credit requirements of farmers, viz., allied and non-farm activities. The Scheme would be referred to as the ‘Scheme to cover term loans for agriculture and allied activities under Kisan Credit Card Scheme’. The Scheme aims at providing adequate and timely credit for the comprehensive credit requirements of farmers under single window, with flexible and simplified procedure, adopting whole farm approach, including the short-term credit needs and a reasonable component for consumption needs, through KCC.

The Scheme would be implemented by all commercial banks, regional rural banks (RRBs), state co-operative banks/district central co-operative banks (DCCBs)/primary agricultural credit societies (PACS) and scheduled primary co-operative banks.

The credit facility extended under the Scheme would be in the nature of term loan and revolving cash credit for agriculture and allied activities.

• The initial investment in fixed assets and/or working capital requirement/recurring expenditure of the borrower may be taken as the basis for fixing the limit. The working capital/recurring expenditure limit may be in the form of a revolving cash credit. Banks may, at their discretion, build in a component of consumption credit, keeping in view family labour, while fixing the overall ceiling amount that could be drawn under the KCC. The total limit would have a relationship with the projected net earning and the repayment capacity of the borrower.

Both the term as well as short term/working capital credit facilities should be provided through a single KCC. The passbook currently provided to KCC holders should be divided into three separate portions for maintaining the records of -

1. short term credit/crop loans,
2. working capital credit for activities allied to agriculture, and
3. term credit.

Banks should, however, ensure that transaction records of different loan facilities are kept distinct.

Borrowers would be eligible to avail of any or all credit facilities given under KCC, as per their requirement. Banks may allow the card holder to utilise the term credit limit for acquiring one or more assets at his convenience. Similarly, KCC holder should also be given flexibility to utilise the term credit limit in one or more instalments as per asset acquirement plan/phasing of the scheme. Banks should monitor proper end-use of credit.

Security, margin, rate of interest and prudential norms would be applicable as per the Reserve Bank’s/NABARD’s stipulations. Banks should further ensure that -

Short term credit/crop loans as well as working capital for agriculture and allied activities would continue to be provided as revolving cash credit limit, repayable in 12 months. The term loan component would be repayable within a maximum period of 5 years, depending on the type of activity/investment.

On satisfactory operations of the working capital credit limit for agriculture and allied activities, banks may enhance the limit, if necessary, at the time of renewal, keeping in view the increase in costs and additional activities, if any, undertaken by the borrower. Similarly, banks may also sanction additional term credit limit to the borrower, at the time of annual review/renewal of credit limits under the card. Present guidelines for the crop loan component remain unchanged.

Coinciding with the introduction of term loan facility under KCC, the validity of the KCC should be extended from 3 years as at present to 5 years.

The Reserve Bank has finalised the guidelines relating to issue of subordinated debt Instruments under Tier II and Tier III capital for primary dealers (PDs). The guidelines which have come into force with immediate effect, are -

All the 300 issues of the Credit Information Review are now available in the form of a compact disk. Those, who wish to obtain a copy free of cost, may kindly write to the Editor, Monetary and Credit Information Review, Reserve Bank of India, Press Relations Division, Central Office, Shahid Bhagat Singh Marg, Mumbai - 400 001. Please note that the CD will be delivered within a period of 3-4 weeks.

The Reserve Bank has reviewd the provisions regarding premature repayment of public deposits/deposits accepted by non-banking financial companies (NBFCs), miscellaneous non-banking companies (MNBCs) and residuary non-banking companies (RNBCs). The revised provisions are -

For the purpose of permission to prepay deposits, it has been decided, in consultation with the Informal Advisory Group on NBFCs, to stratify NBFCs, MNBCs and RNBCs into two categories viz., (i) problem NBFCs, MNBCs and RNBCs and (ii) normally run companies.

Problem companies are prohibited from making premature repayment of any deposits (public deposits in case of NBFCs) or granting any loan against public deposits/deposits. Existing contracts conferring the right for premature withdrawal on the depositor would, however, remain unchanged. Where the depositor does not have such a right or where the problem company has reserved the right to agree to the depositor’s request for prepayment, such company should not effect any premature repayment. This prohibition shall not, however, apply in the following cases :

The facility of premature repayment, after the lock-in period, of public deposits by NBFCs (deposits in case of RNBCs/MNBCs) would, henceforth, be at the sole discretion of the company and cannot be claimed as a matter of right by the depositors. The existing contracts conferring the right for premature withdrawal

on the depositor, would, however, remain unchanged. In the event of death of a depositor, the company may, even within the lock-in period, repay the deposit at the request of the joint holders with survivor clause/nominee/legal heir only against submission of relevant proof.

All deposit accounts standing to the credit of sole/first named depositor in the same capacity should be clubbed and treated as one deposit account for the purpose of premature repayment.

Where a company, at the request of the depositor or at its sole discretion repays a deposit/public deposit before its maturity (including in the case of death of the depositor), it should pay interest at the rates indicated in the box below.

The companies should intimate their depositors at least two months before maturity of their deposits/public deposits, so as to ensure that matured deposits do not remain unclaimed.

The Centralised Core Banking Solution (CBS) is an Inter-branch networking and data sharing platform which makes ‘Anytime’ and ‘Anywhere’ banking a reality. With the implementation of CBS, the customers’ status changes from ‘branch customers’ to ‘bank customers". It is immaterial with which branch of the bank the customer deals with, when he is a CBS branch customer, all the banking facilities are extended through multiple braches connected under CBS. The customer can walk into any of the CBS branches (need not necessarily be his own branch) for his banking needs such as cash deposit, cash withdrawal, cheque deposit, transfer of funds, etc.

With the implementation of CBS, customers can put through the following transactions from any of the CBS branches -

• Cash can be deposited in any of the CBS branches and the same will be instantly credited to the customer’s account with any of the CBS branches.
• Clearing cheques can be deposited at any of the CBS branches and the amount will be collected and credited to the customer’s account maintained with any of the CBS branches.
• Customers can present the cheque at any of the CBS branches and can make cash withdrawal from their account with any of the CBS branches.
• Cheques drawn on any of the CBS branches will be treated as the cheques drawn on the same branch. Thus even outstation cheques drawn on any of the CBS branches can be instantly cleared and credited to the customer’s account maintained with any of the CBS branches.
• A customer need not remit funds by demand draft/telegraphic transfer if the other party is also having account with any of the CBS branches – located anywhere in India. In other words, the customer can transfer funds from his account to any account (own account or third party) with another CBS branch.

Core banking solution also enables banks to launch electronic delivery channels like automated teller machines (ATMs) and telephone banking. A customer’s banking needs can be sourced without him having to physically visit any of the branches – some times right at his business place, residence, market or even while traveling. This is an extended feature of "Anywhere Banking". This facility is available on 24X7 basis i.e., on all the days throughout the year.

The ATM and telephone banking channels can offer the following facilities -

• Balance inquiry
• Cheque status enquiry
• Request for a cheque book
• Request for an electronic statement
• Stop payment instructions
• Online cash withdrawal (through ATMs only)
• Online transfer of funds

Core banking solution has not only changed the way people used to bank in the past but has also opened avenues for delivery of variety of services and channels which are going to lead to customer delight. The internet banking facility with both retail and corporate modules provide a huge data store and transaction facilities to the customers of core banking branches of a bank. Internet banking product of a bank is capable of offering the below mentioned facilities to its customers in addition to those mentioned above -

• Bill payment both online and scheduled
• Third party fund transfers
• Trade finance information
• Limit related information
• Bulk upload of transactions
• Mails and requests

The Government of India has decided to operate the Senior Citizens’ Savings Scheme through the branches of public sector banks which are operating Public Provident Fund Scheme, 1968. Banks have been advised to operate the scheme not later than November 1, 2004.

Edited and published by Alpana Killawala for the Reserve Bank of India, Press Relations Division, Central Office, Shahid Bhagat Singh Marg, Mumbai-400 001 and printed by her at Alco Corporation, A-2, 72, Shah & Nahar Ind. Estate, Lower Parel (West), Mumbai - 400 013. Readers desirous of subscribing may remit the subscription, by way of cheque/DD payable at Mumbai to the Director, DRRP (Sales Section), DEAP, Reserve Bank of India, Amar Building, Sir P. M. Road, P. B. No. 1036, Mumbai - 400 001. Also available on Internet at www.cir.rbi.org.in