2.

With a view to providing one more avenue for bank's lending to agriculture and increasing the outreach of banks in rural areas, it has been decided that lending by Scheduled Primary (Urban) Co-operative banks to Non Banking Financial Companies (NBFCs) for on-lending to agriculture may be reckoned for the purpose of priority sector lending as indirect finance to agriculture.

3.

The financing of NBFCs for on-lending to agriculture may be reported to us under indirect finance to Agriculture in the statement on priority sector advances.

2.

All interest rates on advances from the Reserve Bank as also the penal rates on shortfall on reserve requirements which are specifically linked to the Bank Rate stand revised as indicated in the Annexure.

Annexure

Interest Rates on Advances from Reserve Bank and Penal Rates which are at present Linked to the Bank Rate

Sr. No.

Advances to

Existing Rates

New Rates

(Effective close

of business on

(July 21, 2000)

(Per cent per annum)

1.

Scheduled Commercial Banks

i) Export Credit Refinance Facility

Bank Rate

Bank Rate

(7.0)

(8.0)

ii) Collateralised Lending Facility

CLF

Block I

Bank Rate

Bank Rate

(First 2 weeks)

(7.0)

(8.0)

Block II

Bank Rate plus

Bank Rate plus

(From 3rd week onwards)

2.0 percentage points (9.0)

2.0 percentage points (10.0)

2.

State Co-operative Banks (SCBs)

Towards general banking

Bank Rate

Bank Rate

business such as clearing

(7.0)

(8.0)

adjustments, Liquidity, etc.

NABARD

General Line of Credit (GLC)

i) GLC I

To Provide Refinance in respect of loans

Bank Rate minus

Bank Rate minus

and advances for the purposes of seasonal

1 percentage point

2 percentage points

agricultural operations (SAO) made by

(6.0)

(6.0)

SCBs and Regional Rural Banks (RRBs)

ii) GLC II

To provide refinance to SCB'S, RRBs and

Bank Rate minus

Bank Rate minus

commercial banks for refinancing Weavers'

0.5 percentage points

1.5 percentage points

Co-op. society and for other approved

(6.5)

(6.5)

short-term purposes

4.

Primary (Urban) Co-op. Banks

i) Export Credit Refinance Facility

Bank Rate

Bank Rate

(7.0)

(8.0)

ii) For SSI

Bank Rate

Bank Rate

(7.0)

(8.0)

5.

SIDBI (from NIC (LTO) Fund

Bank Rate

Bank Rate

out of the loan repayment made by IDBI)

(7.0)

(8.0)

6.

Primary Dealers (PDs)

To enable PDs to effectively fulfill their

obligations, the RBI is extending liquidity

support to them against the security of holdings

in Subsidiary General Ledger (SGL) Accounts

Level I

Bank Rate

Bank Rate

(7.0)

(8.0)

7.

State Financial

Bank Rate

Bank Rate

Corporations

(7.0)

(8.0)

8.

Government of India

a) Shortfalls in minimum balances

Bank Rate

Bank Rate

(7.0)

(8.0)

b) Ways and Means Advances

Bank Rate

Bank Rate

(7.0)

(8.0)

c) Overdraft

Bank Rate plus

Bank Rate plus

2.0 percentage points

2 percentage points

(9.0)

(10.0)

9.

State Governments

a) Shortfalls in minimum balances

Bank Rate

Bank Rate

(7.0)

(8.0)

b) Ways and Means Advances

Bank Rate

Bank Rate

(7.0)

(8.0)

c) Overdraft

Bank Rate plus

Bank Rate plus

2.0 percentage points

2.0 percentage points

(9.0)

(10.0)

Penal Interest Rates on shortfalls in

Bank Rate plus3 percentage

Bank Rate plus3 percentage

reserve requirements depending on

points (10.0) or Bank Rate

points (11.0) or Bank Rate

duration of shortfalls

plus 5 percentage points

plus 5.0 percentage points

(12.0)

(13.0)

2.

Limits available to the banks under export credit refinance and CLF will temporarily be reduced to the extent of 50 per cent of the eligible limits as per the present formulae. This will be implemented under two stages: reduction by 25 per cent effective July 29, 2000 and by another 25 per cent effective August 12, 2000 as detailed below:

Limits as per the present

Revised Limit effective

Revised Limit effective

Formula

July 29, 2000

August 12, 2000

(1)

(2)

(3)

(a)

Export Credit Refinance:

Equivalent to 100 per cent of the

75 per cent of

50 per cent of

increase in outstanding export

Col. 1

Col. 1

credit eligible for refinace over

the level of such credit as on

February 16, 1996

(b)

Collateralised Lending Facility

Equivalent to 0.25 per cent of

75 per cent of

50 per cent of

fortnightly average outstanding

Col. 1

Col. 1

aggregate deposits in 1997-98

3.

The Bank Rate has been increased by one percentage point from '7.0 per cent per annum' to '8.0 per cent per annum' with effect from the close of business today (July 21, 2000). Accordingly, effective July 22, 2000, interest rate on export credit refinance will be increased from '7.0 per cent per annum' to '8.0 per cent per annum'. Similarly, effective July 22, 2000, interest rates on CLF would also stand revised as given below:

Rate of Interest

(per cent per annum)

Block I

Bank Rate

(First 2 Weeks)

(8.0)

Block II

Bank Rate plus

(From 3rd week onwards)

2 percentage points

(10.0)

4.

All other terms and conditions remain unchanged.

2.

The increase in CRR by 0.5 percentage point will absorb lendable resources of banks by about Rs. 3,800 crore.

3.

A notification of the above measure is being issued to banks separately.