Annex: Chronology of Major Policy Developments |
Announcement |
|
Measures |
Date |
|
|
|
|
|
|
|
|
|
|
A) Scheduled Commercial Banks (SCBs) |
2005 |
|
|
|
April |
7 |
ï |
The restructured lending and deposit rates of interest in case of amounts disbursed on or before |
|
|
|
October 2003 under RIDF IV to VII, were effective from April 16, 2005. |
|
8 |
ï |
The cut off date for lapsing of sanction and completion of disbursement for the cases sanctioned |
|
|
|
for 2004-05 (under PMRY) in Andaman & Nicobar Islands was extended from March 31, 2005 to |
|
|
|
September 30, 2005. |
|
11 |
ï |
Detailed guidelines issued to banks on rural lending under Annual Credit Plans on the basis of |
|
|
|
Potential Linked Plans (PLPs) prepared by NABARD. |
|
|
ï |
Banks to pay compensation for delayed credit under ECS/EFT/SEFT suo moto. |
|
13 |
ï |
The rate of interest to be charged on group loans under SGSY linked to per capita size of the loans. |
|
15 |
ï |
Banks to put in place a Business Continuity Plan, including a robust information risk management |
|
|
|
system, within a fixed time frame. |
|
16 |
ï |
Banks to take necessary action to convert the existing ad hoc Committees on Procedures and |
|
|
|
Performance Audit of Public Services (CPPAPS) into a Standing Committee on Customer Service. |
|
19 |
ï |
Banks advised on the role of customer service committee of the Board for monitoring the |
|
|
|
implementation of awards under the Banking Ombudsman Scheme. |
|
27 |
ï |
Banks permitted to shift their rural branches within the block/service area without obtaining prior |
|
|
|
approval of the Reserve Bank, subject to their complying with certain conditions. |
|
30 |
ï |
Banks allowed to formulate schemes, subject to the approval of the Reserve Bank, for providing services |
|
|
|
at the premises of a customer within the framework of Section 23 of Banking Regulation Act, 1949. |
|
|
ï |
Banks with capital of at least nine per cent of the risk weighted assets for both credit risk and market risk |
|
|
|
for both Held for Trading (HFT) and Available for Sale (AFS) categories may transfer the balance in |
|
|
|
excess of five per cent of securities included under HFT and AFS categories in the Investment Fluctuation |
|
|
|
Reserve (IFR) to Statutory Reserve, which is eligible for inclusion in Tier I capital. |
May |
4 |
ï |
General permission granted to banks to declare dividends under fulfilment of a few conditions, including |
|
|
|
observance of minimum CRAR and NPA ratio, subject to a ceiling of dividend payout ratio of 40 per cent. |
|
|
ï |
Effective quarter ended June 2005, the time limit for filing the monthly and quarterly off-site |
|
|
|
returns changed to 15 days and 21 days, respectively, from the close of the relevant period for all |
|
|
|
categories of banks. |
|
11 |
ï |
Detailed guidelines were issued for merger/amalgamation of private sector banks, laying down the |
|
|
|
process of merger proposal, determination of swap ratios, disclosures, the stages at which Boards |
|
|
|
will get involved in the merger process and norms of buying/selling of shares by the promoters |
|
|
|
before and during the process of merger. |
|
12 |
ï |
Comprehensive guidelines were issued, allowing all Regional Rural Banks (RRBs) to undertake |
|
|
|
insurance business on a referral basis, subject to certain conditions. |
|
13 |
ï |
The Vision Document on Payment and Settlement System 2005-08 was released. |
|
20 |
ï |
Banks to initiate early action with regard to scheme for ëSmall Enterprises Financial Centresí (SEFCs) |
|
|
|
envisaged for forming a strategic alliance between branches of banks and SIDBI located in the |
|
|
|
clusters for improving credit flow to the SSIs sector. |
|
26 |
ï |
Banks were advised to put in all efforts to achieve the credit mobilisation targets under SGSY |
|
|
|
during 2005-06 including the minimum subsidy credit ratio as fixed by the Government and to |
|
|
|
maintain per family investment of Rs.25,000. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2005 |
|
|
|
June |
7 |
ï |
Banks were allowed to extend financial assistance to Indian companies for acquisition of equity in |
|
|
|
overseas joint ventures/wholly owned subsidiaries or in other overseas companies, new or existing, |
|
|
|
as strategic investment in terms of a Board approved policy, duly incorporated in the loan policy of |
|
|
|
the bank. |
|
9 |
ï |
Instructions issued to banks, in supersession of all earlier instructions, on settlement of claims in |
|
|
|
respect of deceased depositors, covering aspects relating to i) access to balance in deposit account; |
|
|
|
ii) premature termination of term deposit accounts; iii) treatment of flows in the name of the |
|
|
|
deceased depositor; iv) access to the safe-deposit lockers/ safe custody articles; and v) time limit |
|
|
|
for settlement of claims. |
|
|
ï |
Banks (both in private and public sector) need not obtain approval of the Reserve Bank for permitting |
|
|
|
any of their whole-time officers or employees (other than a Chairman/CEO) to become Director or |
|
|
|
a part-time employee of any other company. |
|
14 |
ï |
Processing charges waived for all electronic products for transactions under EFT, SEFT and ECS |
|
|
|
facility involving Rs.2 crore and above with immediate effect upto the period ending March 31, |
|
|
|
2006. |
|
20 |
ï |
Banks advised that while furnishing data/information to the Government or other investigating |
|
|
|
agencies, they should satisfy themselves that the information is not of such a nature as to violate |
|
|
|
the provisions of the laws relating to secrecy in banking transactions. |
|
24 |
ï |
For the purpose of Section 20 of the Banking Regulation Act, 1949, the term ëloans and advancesí |
|
|
|
shall not include line of credit/ overdraft facility extended by settlement bankers to National Security |
|
|
|
Clearing Corporation Limited (NSCCL) to facilitate smooth settlement. |
|
25 |
ï |
Banks opting for rights issues should henceforth make complete disclosures of the regulatory |
|
|
|
requirements in their offer documents. |
|
29 |
ï |
Banks advised to have a Board mandated policy in respect of their real estate exposure covering |
|
|
|
exposure limits, collaterals to be considered, margins to be kept, sanctioning authority/level and |
|
|
|
sector to be financed. Banks also directed to report their real estate exposure under certain heads |
|
|
|
and disclose their gross exposure to real estate sector and provide details of the break-up in their |
|
|
|
Annual Report. |
July |
1 |
ï |
Fresh investments by banks in venture capital made ineligible for classification under priority |
|
|
|
sector lending with immediate effect. Investments in venture capital made by banks up to June 30, |
|
|
|
2005 made ineligible for classification under priority sector lending with effect from April 1, 2006. |
|
5 |
ï |
Banks allowed the discretion to approach any general insurance company (which is a member of |
|
|
|
General Insurersí Public Sector Association of India) or any private sector general insurance company |
|
|
|
to provide personal accident insurance cover to Kisan Credit Card (KCC) holders at competitive |
|
|
|
rates/terms. |
|
13 |
ï |
Banks advised to furnish information on pricing of services for products based on RTGS / SEFT/ |
|
|
|
EFT/ECS infrastructure. |
|
|
ï |
Guidelines issued on sale/purchase of NPAs, including valuation and pricing aspects, and prudential |
|
|
|
and disclosure norms. |
|
20 |
ï |
Banks permitted to offer internet banking services without the prior approval of the Reserve Bank |
|
|
|
but subject to fulfillment of certain conditions. |
|
23 |
ï |
Select commercial banks have been delegated the authority to grant permission to companies listed |
|
|
|
on a recognised stock exchange, to hedge the price risk in respect of any commodity (except gold, |
|
|
|
silver, petroleum and petroleum products) in the international commodity exchanges/markets. |
|
26 |
ï |
The risk weight for credit risk on capital market and commercial real estate exposure increased |
|
|
|
from 100 per cent to 125 per cent. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2005 |
|
|
|
July |
29 |
ï |
Guidelines issued for relief measures by banks in areas affected by unprecedented rains and floods |
|
|
|
in Maharashtra. Accordingly, banks were advised to consider granting consumption loans to the |
|
|
|
affected persons upto Rs.5,000 without any collateral and Rs.10,000 at the discretion of the branch |
|
|
|
manager, depending on the repaying capacity of the borrower. |
August |
2 |
ï |
Banks to issue necessary instructions to the Controlling Offices of currency chest branches to ensure |
|
|
|
verification of balances as per the stipulated minimum periodicity and that the essential safeguards |
|
|
|
in the internal control system (such as surprise verification/joint custody) are adhered to. |
|
|
ï |
In view of the unprecedented floods in Maharashtra and the need to provide immediate succour, |
|
|
|
banks were advised to observe minimum formalities for enabling affected persons to open bank |
|
|
|
account quickly. |
|
3 |
ï |
Banks advised to formulate a detailed mid-term corporate plan of branch expansion for a three- |
|
|
|
year period with the approval of the Board. The plan should cover all categories of branches/offices |
|
|
|
having customer contact, including specialised branches, extension counters and number of ATMs. |
|
|
|
The plan should be formulated on district-wise basis giving number of branches proposed to be |
|
|
|
opened in metropolitan/urban/semi-urban/rural areas. The proposal for branch expansion with |
|
|
|
the above mentioned details should be submitted on an annual basis by December every year. |
|
19 |
ï |
In pursuance to the announcement made by the Union Finance Minister for stepping up credit to |
|
|
|
small and medium enterprises, public sector banks were advised to initiate steps to improve the |
|
|
|
flow of credit to the sector. A reporting and monitoring system for the same was also prescribed. |
|
|
|
Similar guidelines were issued to private sector banks, foreign banks, RRBs and LABs on August |
|
|
|
25, 2005. |
|
23 |
ï |
Banks were advised to make all out efforts in achieving the targets set for increasing the credit flow |
|
|
|
to SCs/STs under priority sector advances as well as under the Government sponsored schemes |
|
|
|
such as SGSY, SJSRY, SLRS and PMRY. Banks were also asked to ensure that sufficient publicity is |
|
|
|
given on the facilities extended to SCs/STs and all the instructions contained in the Master Circular |
|
|
|
on credit facilities to SCs/STs are strictly followed. |
|
|
ï |
The KYC procedure for opening bank accounts simplified for those persons who intend to keep |
|
|
|
balances not exceeding Rs.50,000 in all their accounts taken together and the total credit in all |
|
|
|
the accounts taken together is not expected to exceed Rs.1,00,000 in a year. Banks may open |
|
|
|
accounts with introduction from another account holder (holding account for at least six months) |
|
|
|
who has been subjected to full KYC procedure or any other evidence as to identify the customer |
|
|
|
to the satisfaction of the bank. Similar guidelines were also issued to RRBs. |
|
31 |
ï |
Banks were advised that for the purpose of Section 20 of the Banking Regulation Act, 1949, the |
|
|
|
term ëLoans and Advancesí shall not include line of credit/overdraft facilities extended by settlement |
|
|
|
bankers to Clearing Corporation of India Ltd. (CCIL). |
September |
1 |
ï |
Banks participating in the Pilot Cheque Truncation Project at New Delhi were advised to address |
|
|
|
issues requiring urgent action including finalisation of the ëpoint of truncationí for their outward |
|
|
|
presentations and the point of processing for inward payments, of the instrument, amendment of |
|
|
|
their existing internal banking and clearing manuals, use of new processing tools, and deciding |
|
|
|
upon the systems for storage of inward and outward images. |
|
|
ï |
It was clarified to the banks that with respect to transactions matched on the NDS-OM module, |
|
|
|
since CCIL is the central counterparty to all deals, exposure of any counterparty for a trade is only |
|
|
|
to CCIL and not to the entity with whom a deal matches. However, all Government securities |
|
|
|
transactions, other than those matched on NDS-OM will continue to be physically confirmed by the |
|
|
|
back offices of the counterparties, as hitherto. |
|
3 |
ï |
Guidelines on one time settlement scheme for SME accounts issued to public sector banks for |
|
|
|
recovery of NPAs below Rs.10 crore. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2005 |
|
|
|
September |
5 |
ï |
Banks, which are nominated to import gold, were allowed to extend gold (metal) loans to domestic |
|
|
|
jewellery manufacturers, who are not exporters of jewellery, subject to certain conditions. |
|
|
|
|
|
8 |
ï |
The policy for authorisation of the branches of banks in India liberalised and rationalised with a |
|
|
|
framework for a branch authorisation policy made consistent with the medium term corporate |
|
|
|
strategy of banks and public interest. While considering applications for opening branches, weightage |
|
|
|
would be given to the nature and scope of facilities provided by banks to common persons, |
|
|
|
particularly in underbanked areas, actual credit flow to the priority sector, pricing of products and |
|
|
|
overall efforts for promoting financial inclusion, including introduction of appropriate new products |
|
|
|
and the enhanced use of technology for delivery of banking services. |
|
|
ï |
Banks were advised to implement a debt restructuring mechanism for units in SME sector. Detailed |
|
|
|
guidelines were laid down relating to eligibility criteria for SMEs and accounts, viability criteria, |
|
|
|
prudential norms for restructured accounts, treatment of additional finance, asset classification |
|
|
|
and repeated restructuring. |
|
|
|
|
|
9 |
ï |
Industrial Development Bank of India (IDBI) Ltd. was excluded from the Second Schedule to the |
|
|
|
Reserve Bank of India Act, 1934 with effect from April 2, 2005. |
|
|
|
|
|
24 |
ï |
Bank of Punjab Ltd. was merged with Centurion Bank Ltd. with effect from October 1, 2005. |
|
|
|
|
October |
1 |
ï |
Conversions/rescheduling of loans in the case of natural calamities, when there is delay in declaration |
|
|
|
of Annewari by the State Government, may be proceeded following such declaration by the District |
|
|
|
Consultative Committee (DCC). |
|
|
|
|
|
9 |
ï |
The limit of consumption loan to be provided to the affected persons in the state of Jammu and |
|
|
|
Kashmir and other parts of North India in the wake of the earthquake increased up to Rs.5,000 |
|
|
|
without any collateral. This limit may be enhanced to Rs.10,000 at the discretion of the branch |
|
|
|
manager, depending on the repaying capacity of the borrower. Banks may also consider provision |
|
|
|
of financial assistance for the purpose of repairs/reconstruction of dwelling units, etc., damaged |
|
|
|
on account of earthquake. |
|
|
|
|
|
10 |
ï |
Banks, which have maintained capital of at least nine per cent of the risk weighted assets for both |
|
|
|
credit risks and market risks for both HFT and AFS category as on March 31, 2006, would be |
|
|
|
permitted to treat the entire balance in the IFR as Tier I capital. For this purpose, banks may |
|
|
|
transfer the entire balance in the IFR ëbelow the lineí in the Profit and Loss Appropriation Account |
|
|
|
to Statutory Reserve, General Reserve or balance of Profit and Loss Account. |
|
|
|
|
|
15 |
ï |
Revised guidance note on management of operational risk issued to banks. The design of risk |
|
|
|
management framework should be oriented towards the banksí own requirements dictated by the |
|
|
|
size and complexity of business, risk philosophy, market perception and the expected level of |
|
|
|
capital. The risk management systems in the bank should, however, be adaptable to changes in |
|
|
|
business, size, market dynamics and introduction of innovative products by banks in future. |
|
|
|
|
|
17 |
ï |
Banks to provide details to the customers in their Pass Book/Account Statement regarding the |
|
|
|
credits effected through ECS. Similar approach to be adopted for capturing the sender/remittance |
|
|
|
details of other electronic payment products like EFT, SEFT and RTGS. |
|
|
|
|
|
18 |
ï |
Banks to take appropriate action to ensure successful implementation of SGSY as per the |
|
|
|
recommendations of the Central Level Coordination Committee (CLCC). The recommendations |
|
|
|
include, delegation of powers to branch managers to sanction SGSY applications, disposal of all |
|
|
|
the pending applications as at the end of the year by the first quarter of the succeeding year, |
|
|
|
utilisation of micro-finance institutions for bridging the credit gap, making efforts to achieving the |
|
|
|
desired credit to subsidy ratio of 1:3, submission of status report to Ministry of Rural Development |
|
|
|
on the under-performance of their bank branches, and maintaining separate record in respect of |
|
|
|
SGSY distinct from IRDP. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2005 |
|
|
|
October |
25 |
ï |
Reverse repo rate and repo rate, under the liquidity adjustment facility (LAF) of the Reserve Bank, |
|
|
|
increased by 25 basis points each from October 26, 2005 to 5.25 per cent and 6.25, respectively. |
November |
2 |
ï |
Banks (excluding RRBs) advised that while considering granting advances against jewellery, they |
|
|
|
may keep in view the advantages of hallmarked jewellery and decide on the margin and rates of |
|
|
|
interest thereon. |
|
4 |
ï |
The general provisioning requirement for ëstandard advancesí, with the exception of banksí direct advances |
|
|
|
to agricultural and SME sectors, increased from the present level of 0.25 per cent to 0.40 per cent. |
|
9 |
ï |
Banks to set up Special Sub-Committees of DLCC in the districts having credit deposit ratio less |
|
|
|
than 40 per cent, in order to monitor and to draw up monitorable action plans to increase the |
|
|
|
ratio. The districts having ratios between 40 per cent and 60 per cent will be monitored by DLCC |
|
|
|
under the existing system. |
|
10 |
ï |
Revised guidelines on CDR mechanism issued. The major modifications included, extension of the |
|
|
|
scheme to entities with outstanding exposure of Rs.10 crore or more, requirement of support of 60 |
|
|
|
per cent of creditors by number in addition to the support of 75 per cent of creditors by value, |
|
|
|
discretion to the core group in dealing with wilful defaulters, linking the restoration of asset |
|
|
|
classification to implementation of the CDR package within four months, restricting the regulatory |
|
|
|
concession in asset classification and provisioning to the first restructuring, convergence in the |
|
|
|
methodology for computation of economic sacrifice, limiting the Reserve Bankís role to providing |
|
|
|
broad guidelines for CDR mechanism, enhancing disclosures in the balance sheet, pro-rata sharing |
|
|
|
of additional finance requirement by both term lenders and working capital lenders, and allowing |
|
|
|
one-time settlement as a part of the CDR mechanism to make the exit option more flexible. |
|
|
ï |
For the purpose of CDR mechanism for SMEs involving wilful defaulters, banks were advised to |
|
|
|
review the reasons for classification of the borrower as wilful defaulter specially in old cases where |
|
|
|
the manner of classification of a borrower as a wilful defaulter was not transparent and satisfy |
|
|
|
itself that the borrower is in a position to rectify the wilful default status, provided an opportunity |
|
|
|
is granted to him under the Debt Restructuring Mechanism for SMEs. Such exceptional cases may |
|
|
|
be admitted for restructuring with the approval of the Board only. |
|
11 |
ï |
With a view to achieving the objective of greater financial inclusion, all banks were advised to initiate |
|
|
|
steps within one month, to make available a basic banking ëno-frillsí account either with ënilí or very low |
|
|
|
minimum balances and to report to the Reserve Bank on a quarterly basis. Banks were also advised to |
|
|
|
give wide publicity including on their web sites, to the facility of such ëno-frillsí account, indicating the |
|
|
|
charges in a transparent manner. Similar guidelines issued to RRBs on December 27, 2005. |
|
16 |
ï |
All the present SEFT clearing banks were advised to migrate to NEFT system by December 15, |
|
|
|
2005. Banks, which fulfill the eligibility criteria for participation in RTGS, were invited to participate |
|
|
|
in the NEFT. As NEFT serves all the bank customers using SEFT, the SEFT system would be |
|
|
|
discontinued from January 1, 2006. |
|
21 |
ï |
Banks were advised to have a well documented policy and a Fair Practices Code for credit card |
|
|
|
operations. The Fair Practices Code for credit card operations released by IBA in March 2005 |
|
|
|
could be adopted by banks for this purpose. Guidelines include norms relating to issue of cards, |
|
|
|
interest rate and other charges, wrongful billing, use of DSAs / DMAs and other agents, protection |
|
|
|
of customer rights, right to privacy, customer confidentiality, fair practices in debt collection, |
|
|
|
redressal of grievances, internal control and monitoring system, and right to impose penalty. |
|
22 |
ï |
Agency banks to confirm that they have filed the Annual Information Returns in respect of all their |
|
|
|
authorised branches which have accepted the subscription of Rs.5 lakh or more in respect of |
|
|
|
Saving Bonds issued by them during the period April 1, 2004 to March 31, 2005. |
|
23 |
ï |
Banks were advised to develop appropriate delivery channels of electronic payment services using |
|
|
|
the payment systems developed by the Reserve Bank, like RTGS, ECS, EFT and NEFT, with no |
|
|
|
further delay. The service charges may also be reviewed keeping in view the need for promotion of |
|
|
|
electronic payment culture. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2005 |
|
|
|
December |
5 |
ï |
Banks were advised to consider increasing the limit of consumption loan to be provided to the |
|
|
|
calamity affected persons in Tamil Nadu upto Rs.5,000 without any collateral. This limit may be |
|
|
|
enhanced to Rs.10,000 at the discretion of the branch manager, depending on the repaying capacity |
|
|
|
of the borrower. |
|
6 |
ï |
State level in-charges of Small Farmersí Agri-Business Consortium (SFAC) and Nodal Officers of |
|
|
|
SFAC to be invited in the Sub-Committee of State Level Bankersí Committee (SLBC) as ëSpecial |
|
|
|
Inviteesí to discuss the problems, if any, faced in the implementation of Scheme for establishment |
|
|
|
of Agri-Clinics/Agri-business in rural areas. |
|
|
ï |
All private sector banks were advised to ensure that they actively participate in the various fora |
|
|
|
under Lead Bank Scheme to increase the flow of credit to agriculture, priority sector and weaker |
|
|
|
sections of the society. |
|
|
ï |
Draft guidelines were issued on outsourcing of financial services by banks. |
|
21 |
ï |
Profit making banks permitted make donations during a financial year (which can not be carried |
|
|
|
forward) aggregating upto one per cent of the published profit of the banks for the previous year. |
|
|
|
Loss-making banks were permitted to make donations totalling Rs.5 lakh only in a financial year |
|
|
|
including donations to exempted entities/funds. |
|
27 |
ï |
Banks (excluding RRBs) are not allowed to extend advances, including to their employees/ Employee |
|
|
|
Trusts set up by them, for the purpose of purchasing their (banksí) own shares under ESOP/IPO or |
|
|
|
from the secondary market. This prohibition will apply irrespective of whether the advances are |
|
|
|
unsecured or secured. |
|
|
ï |
Guidelines on General Credit Card (GCC) scheme issued to banks (including RRBs) for issuing |
|
|
|
GCC in rural and semi-urban areas, based on the assessment of income and cash flow of the |
|
|
|
household similar to that prevailing under normal credit card. Interest rate on the facility may be |
|
|
|
charged, as considered appropriate and reasonable. Banks advised to utilise the services of local |
|
|
|
post offices, schools, primary health centers, local government functionaries, farmersí association/ |
|
|
|
club, well-established community-based agencies and civil society organisations for sourcing of |
|
|
|
borrowers for issuing GCC. |
|
|
ï |
For accelerating the flow of credit by RRBs, a few measures were introduced including; i) provision |
|
|
|
of lines of credit by sponsor banks at reasonable rates of interest; ii) borrowing by RRBs from/ |
|
|
|
place funds with other RRBs including those sponsored by other banks subject to counter-party |
|
|
|
credit risk policy and limits; iii) organising training programme/s with help from the Reserve Bank |
|
|
|
and NABARD in the regulatory and operational aspects of the Repo/CBLO market; iv) setting up an |
|
|
|
off-site ATM in its area of operation after assessing the cost and benefit; v) opening of currency |
|
|
|
chests to be considered by the Reserve Bank; vi) reviewing of the existing norms by RBI for conduct |
|
|
|
of various types of foreign exchange transactions by RRBs; and vii) handling pension and other |
|
|
|
Government business as sub-agents. |
|
|
ï |
Banks (including RRBs) and LABs advised to provide a simplified mechanism for one-time settlement |
|
|
|
of loans where the principal amount is equal to or less than Rs.25,000 and which have become |
|
|
|
doubtful and loss assets as on September 30, 2005. In case of loans granted under Government- |
|
|
|
sponsored schemes, banks may frame separate guidelines following a state-specific approach to be |
|
|
|
evolved by the SLBC. The borrowers whose accounts are settled under this mechanism will be |
|
|
|
eligible for fresh loans. |
|
28 |
ï |
Banks were advised to make available all printed material used by retail customers including |
|
|
|
account opening forms, pay-in-slips and passbooks in trilingual form i.e., English, Hindi and the |
|
|
|
concerned Regional Language. Similar guidelines were issued to RRBs, on December 30, 2005. |
2006 |
|
|
|
January |
20 |
ï |
Banks were advised to ensure filing of the Returns under Banking Cash Transaction Tax (BCTT), |
|
|
|
every month and in case the particular bank has no collection under BCTT a ëNILí Return may |
|
|
|
be filed. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2006 |
|
|
|
January |
23 |
ï |
The revised guidelines on branch authorisation policy include, i) requirement of approaching Central |
|
|
|
Office of the Reserve Bank for licencing, obviating the need for approaching Regional Offices; ii) |
|
|
|
listing of types of branches for which proposal should be submitted; iii) reporting of opening of all |
|
|
|
types of branches; iv) the validity and the extension of authorisation granted; v) shifting of branch; |
|
|
|
vi) conversion of specialised branch, conversion of extension counter into a full-fledged branch; |
|
|
|
viii) conversion of rural branch into satellite office; and viii) merger of rural branch. |
|
|
ï |
Banks were prohibited from crediting ëaccount payeeí cheque to the account of any person other |
|
|
|
than the payee named therein. Where the drawer/payee instructs the bank to credit the proceeds of |
|
|
|
collection to any account other than that of the payee, the instruction being contrary to the intended |
|
|
|
inherent character of the ëaccount payeeí cheque, bank should ask the drawer/payee to have the |
|
|
|
cheque or the account payee mandate thereon withdrawn by the drawer. This instruction would |
|
|
|
also apply with respect to the cheque drawn by a bank payable to another bank. |
|
25 |
ï |
Banks advised to augment their capital funds by issue of the following additional instruments: i) |
|
|
|
innovative perpetual debt instruments (IPDI) eligible for inclusion as Tier 1 capital, ii) debt capital |
|
|
|
instruments eligible for inclusion as upper Tier 2 capital, iii) perpetual non-cumulative preference |
|
|
|
shares eligible for inclusion as Tier 1 capital, and iv) redeemable cumulative preference shares |
|
|
|
eligible for inclusion as Tier 2 capital. |
|
|
ï |
FIIs registered with SEBI and NRIs permitted to subscribe to the issue of perpetual debt instruments |
|
|
|
eligible for inclusion as Tier-I capital and debt capital instruments as upper Tier-II capital, subject |
|
|
|
to certain limits. |
|
|
ï |
Guidelines issued to banks for the use of business facilitator and correspondent models to achieve |
|
|
|
greater financial inclusion and to†increase the outreach of the banking sector. The guidelines include, |
|
|
|
i) eligible entities and scope of activities under business facilitator and correspondent models; ii) |
|
|
|
payment of commission/ fees and other terms and conditions for these entities; iii) redressal of |
|
|
|
grievances; and iv) compliance with know your customer (KYC) norms. |
|
31 |
ï |
ING Bank N.V. excluded from the Second Schedule to the Reserve Bank of India Act, 1934 with |
|
|
|
effect from October 28, 2005. |
February |
2 |
ï |
Guidelines on securitisation of standard assets issued to all banks (excluding RRBs). The guidelines |
|
|
|
include definitions and norms relating to true sale, criteria to be met by SPV, special features |
|
|
|
including representations and warranties and re-purchase of assets from SPVs, policy on provision |
|
|
|
of credit enhancement, liquidity and underwriting facilities, policy on provision of services, |
|
|
|
prudential norms for investment in the securities issued by SPV and accounting treatment of the |
|
|
|
securitisation transactions. |
|
6 |
ï |
In order to obviate the time lag between the issue of orders by the Government on dearness relief |
|
|
|
and other allowances for the pensioners, pension paying banks may put in place a mechanism to |
|
|
|
immediately obtain copies of Government Orders and release it to the pension paying branches for |
|
|
|
action at their end. |
|
7 |
ï |
Banks (excluding RRBs) were advised to review their existing procedure for export credit, Gold |
|
|
|
Card Scheme, export credit for non-star exporters and other issues on the lines prescribed in the |
|
|
|
notification in this regard. |
|
15 |
ï |
Banks were advised to examine the provisions of Prevention of Money Laundering Act (PMLA), |
|
|
|
2002 as also the Rules notified there under on July 1, 2005 and initiate measures considered |
|
|
|
necessary to ensure compliance. The Rules include, maintenance of records of transactions, |
|
|
|
preservation of information and reporting to financial intelligence unit-India, Ministry of Finance. |
|
|
|
Similar guidelines were issued to RRBs on March 9, 2006. |
|
20 |
ï |
Banks were advised that loans to power distribution corporations/companies, emerging out of |
|
|
|
bifurcation/restructuring of SEBs, may also be classified as indirect finance to agriculture, subject |
|
|
|
to certain conditions. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2006 |
|
|
|
February |
27 |
ï |
Banks (excluding RRBs) made eligible to apply for primary dealership subject to the following |
|
|
|
guidelines: i) banks which do not at present have a partly or wholly owned subsidiary and fulfill the |
|
|
|
following criteria (a) minimum net owned funds of Rs.1,000 crore, (b) minimum CRAR of nine per |
|
|
|
cent (c) net NPAs of less than three per cent, and d) a profit making record for the last three years; |
|
|
|
(ii) Indian banks which are undertaking PD business through a partly or wholly owned subsidiary |
|
|
|
and wish to undertake PD business departmentally by merging/taking over PD business from their |
|
|
|
partly/wholly owned subsidiary, subject to fulfilling the criteria as laid down above; (iii) foreign |
|
|
|
banks operating in India who wish to undertake PD business departmentally by merging the PD |
|
|
|
business being undertaken by group companies, subject to fulfillment of the above criteria. |
March |
1 |
ï |
Banks were advised while appraising loan proposals involving real estate, they should ensure that |
|
|
|
the borrowers should have obtained prior permission from Government/local Governments/other |
|
|
|
statutory authorities for the project, wherever required. |
|
3 |
ï |
Banks were advised to expedite the process of allotting Indian Financial System Codes (IFSC) to |
|
|
|
the branches. It was also decided that IFSC of the branch be printed just above the MICR band on |
|
|
|
the cheques, preferably above the serial number of the cheque. |
|
6 |
ï |
The name of ëCenturion Bank Limitedí has been changed to ëCenturion Bank of Punjab Limitedí in |
|
|
|
the Second Schedule to the Reserve Bank of India Act, 1934 with effect from October 17, 2005. |
|
9 |
ï |
Banks were advised that they may first credit the proposed relief to the farmerís account before |
|
|
|
March 31, 2006 and thereafter seek reimbursement. The modalities of interest calculation was |
|
|
|
also laid out. This measure was announced to grant relief of two percentage points in the interest |
|
|
|
rate, as envisaged in the Union Budget Speech, on the principal amount upto Rs.1 lakh on crop |
|
|
|
loans availed by the farmers for Kharif and Rabi 2005-06. |
|
|
ï |
An additional nine branches of nine banks were designated for the purpose of collection of |
|
|
|
contribution to Prime Ministerís National Relief Fund (PMNRF), in addition to the already designated |
|
|
|
branches of twelve banks. |
|
16 |
ï |
The concessions/credit relaxations to borrowers/customers in the state of Jammu and Kashmir |
|
|
|
will continue to be operative for a further period of one year i.e., upto March 31, 2007. |
|
17 |
ï |
The name of ëUFJ Bank Ltdí excluded from the Second Schedule to the Reserve Bank of India Act, |
|
|
|
1934 with effect from January 1, 2006. The name of ëThe Bank of Tokyo - Mitsubishi, Ltdí changed |
|
|
|
to ëThe Bank of Tokyo - Mitsubishi UFJ, Ltdí in the Second Schedule to the Reserve Bank of India |
|
|
|
Act, 1934 with effect from January 1, 2006. |
|
21 |
ï |
Banks were advised to suitably extend the banking hours of their branches authorised to conduct |
|
|
|
Government business by keeping the counters open for the purpose, taking into account security |
|
|
|
aspects of the bank branch concerned to accomodate the rush of the assesses for payment of taxes. |
|
|
|
No assessee should be turned away from the bank without payment of tax and special clearing |
|
|
|
(with return clearing) may be conducted in the evening/night of March 31, 2006. |
|
24 |
ï |
As the performance of implementing banks in respect of sanction and disbursement under PMRY |
|
|
|
for 2005-06 is not satisfactory, the Ministry of Agro and Rural Industries, Government of India |
|
|
|
decided to extend the cut-off date for lapsing of sanction and completion of disbursement for the |
|
|
|
sanction cases of 2005-06 by a further period of two months, i.e., upto May 31, 2006. |
|
|
ï |
Norms relating to risk weight and exposure norms for bills discounted under letter of credit (LC) revised |
|
|
|
for banks. Accordingly, i) bills purchased/discounted/negotiated under LC (where the payment to the |
|
|
|
beneficiary is not made ëunder reserveí) will be treated as an exposure on the LC issuing bank and not on |
|
|
|
the borrower; ii) all clean negotiations as indicated above will be assigned the risk weight as is normally |
|
|
|
applicable to inter-bank exposures, for capital adequacy purposes; and iii) in the case of negotiations |
|
|
|
ëunder reserveí the exposure should be treated as on the borrower and risk weight assigned accordingly. |
|
29 |
ï |
Banks to deduct income tax at source while disbursing interest payment under the Senior Citizens |
|
|
|
Savings Scheme (SCSS)-2004. |
|
31 |
ï |
It has been decided to extend the exemption granted to RRBs from ëmark to marketí norms in |
|
|
|
respect of their investments in SLR securities by one more year i.e., for the financial year 2006-07. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2006 |
|
|
|
April |
4 |
ï |
Banks were advised that principal and interest due on working capital loans in poultry industry as |
|
|
|
also installments and interest on term loans therein which have fallen due for payment on/after the |
|
|
|
onset of bird flu, i.e., February 1, 2006 and remaining unpaid may be converted into term loans. |
|
|
|
The converted loans may be recovered in installments based on projected future inflows over a |
|
|
|
period up to three years with an initial moratorium of up to one year. Other measures include a |
|
|
|
proposal from Union Government for grant of a one time interest subvention of four per cent per |
|
|
|
annum on the outstanding principal amount as on March 31, 2006 (not including any part of the |
|
|
|
principal amount that has become overdue) to all poultry units availing loans from banks. |
|
5 |
ï |
Banks were advised to instruct designated branches to strictly adhere to the direction that only one |
|
|
|
bond ledger account (BLA) shall be opened in the name of each investor for operations in relief/ |
|
|
|
savings bonds. The existing multiple BLAs, if any, in the name of the same investor should be |
|
|
|
reviewed and merged into one BLA. |
|
12 |
ï |
Banks (excluding RRBs) were advised to furnish annual return in the revised format within one |
|
|
|
month in respect of non-SSI (sick/weak) industrial units beginning from March 31, 2006. As a one |
|
|
|
time measure, the banks are required to furnish data in the revised format for the period ending |
|
|
|
March 31, 2004 and March 31, 2005 by May 2006. |
|
|
ï |
Banks were advised to charge specific transfer fee in case of transfer of account from one deposit |
|
|
|
office to another, in terms of Senior Citizens Savings Scheme (Amendment) Rules, 2006, where the |
|
|
|
deposit is rupees one lakh or above, a transfer fee of rupees five per lakh of deposit for the first |
|
|
|
transfer and rupees ten per lakh of deposit for the second and subsequent transfers shall be payable. |
|
13 |
ï |
Banks were advised that the Government of India have allocated a target of 3,84,340 persons to |
|
|
|
States/UTs under PMRY for the year 2006-07. |
|
20 |
ï |
Banks were advised that the term ëloan or advanceí in clause (a) of the Explanation under sub- |
|
|
|
section 4 of Section 20 of the Banking Regulation Act, 1949 (10 of 1949), shall not include a credit |
|
|
|
limit granted under credit card facility provided by the bank to its Directors to the extent the credit |
|
|
|
limit so granted is determined by the bank by applying the same criteria as applied by it in the |
|
|
|
normal conduct of the credit card business. |
May |
2 |
ï |
Credit mobilisation target for the year 2006-07 under SGSY was fixed at Rs.2,814 crore by the |
|
|
|
Government of India. State Level Bankersí Committees (SLBCs) should finalise the targets of |
|
|
|
individual banks on the basis of acceptable parameters like resources and number of rural/semi |
|
|
|
urban branches, so that each bank will be in a position to arrive at its corporate target. Banks were |
|
|
|
advised to make efforts to achieve the credit targets, minimum subsidy credit ratio as fixed by the |
|
|
|
Government and maintain per family investment of Rs.25,000. |
|
8 |
ï |
The rates of agency commission payable to banks for conduct of Government business has been revised. |
|
|
|
For ëother paymentsí excluding ëreceiptsí and ëpension paymentsí rates applicable from July 1, 2006 |
|
|
|
would stand at nine paisa per Rs.100 turnover in place of Rs.50 per transaction applicable currently. |
|
|
ï |
Banks were advised to take corrective action to rectify deficiencies in Annual Information Returns |
|
|
|
filed under Section 285 BA of Income Tax Act, 1961 for the Financial Year 2004-05 and submit a |
|
|
|
ëSupplementary Information Reportí, if need be, to the Income Tax Department. The necessary |
|
|
|
information for 2005-06 is to be furnished before May 31, 2006. |
|
16 |
ï |
Banks (including RRBs) were advised to display and update, on their website, the details of various |
|
|
|
service charges in the prescribed format. SCBs are also to display the charges relating to certain |
|
|
|
services as prescribed in their offices/branches. This may also be displayed in the local language. |
|
17 |
ï |
RRBs, were advised that with approval of their Board of Directors, they may enter into agreements |
|
|
|
with mutual funds for marketing their units subject to certain conditions, including i) the bank |
|
|
|
should act as an agent of the customers; ii) the purchase of MF units should be at the customersí |
|
|
|
risk and without the bank guaranteeing any assured return; iii) the bank should not acquire such |
|
|
|
units of mutual fund from the secondary market; iv) the bank should not buy back units of mutual |
|
|
|
funds from the customers; and v) compliance with extant KYC/AML guidelines. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2006 |
|
|
|
May |
23 |
ï |
It was clarified to banks that the interest subvention related to relief measures to specific categories |
|
|
|
of poultry industry will be calculated at four percentage points on the term loans and working |
|
|
|
capital loans outstanding as on March 31, 2006. |
|
25 |
ï |
The risk weight on exposure of banks to commercial real estate increased to 150 per cent from 125 per |
|
|
|
cent. Further, total exposure of banks to venture capital funds will form a part of its capital market |
|
|
|
exposure and, henceforth, a higher risk weight of 150 per cent will be assigned to these exposures. |
|
29 |
ï |
The general provisioning requirement for banks on standard advances in specific sectors, i.e., |
|
|
|
personal loans, loans and advances qualifying as capital market exposures, residential housing |
|
|
|
loans beyond Rs.20 lakh and commercial real estate loans increased to 1.0 per cent from the |
|
|
|
present level of 0.40 per cent. |
|
|
ï |
Banks (excluding RRBs) were advised to disclose in the ëNotes on Accountí the information providing |
|
|
|
details of break-up of provisions and contingencies shown under the head ëExpenditureí in Profit |
|
|
|
and Loss Account as follows: i) provisions for depreciation on investment; ii) provision towards |
|
|
|
NPA; iii) provision towards standard asset; iv) provision made towards income tax; and v) other |
|
|
|
provision and contingencies (with details). |
June |
5 |
ï |
In pursuance with the announcement in the Union Budget, 2006-07, the Government will provide |
|
|
|
interest subvention of two per cent per annum to public sector banks (PSBs) and RRBs in respect |
|
|
|
of short-term production credit up to Rs.3 lakh provided to farmers. The amount of subvention |
|
|
|
will be calculated on the amount of the crop loan disbursed from the date of disbursement/drawal |
|
|
|
up to the date of payment or up to the date beyond which the outstanding loan becomes overdue |
|
|
|
i.e., March 31, 2007 for Kharif and June 30, 2007 for Rabi, respectively, whichever is earlier. This |
|
|
|
subvention will be available to PSBs and RRBs on the condition that they make available short- |
|
|
|
term credit at ground level at seven per cent per annum. In case of RRBs, this will be applicable |
|
|
|
only to short term production credit disbursed out of their own funds and will exclude such credit |
|
|
|
supported by NABARD refinance. Banks were advised to immediately, provide their estimates of |
|
|
|
short-term production credit to farmers up to Rs.3 lakh for Kharif and Rabi 2006-07, separately. |
|
8 |
ï |
Banks (excluding RRBs) were advised not to enter into swap transactions involving conversion of |
|
|
|
fixed rate rupee liabilities in respect of innovative Tier I/Tier II bonds into floating rate foreign |
|
|
|
currency liabilities. Further, with regard to swaps already entered into, banks are to follow certain |
|
|
|
procedure for accounting gains / losses arising out of such swap transactions. |
|
12 |
ï |
Bureau of Indian Standards (BIS) has formulated a comprehensive National Building Code (NBC) |
|
|
|
of India 2005, providing guidelines for regulating the building construction activities across the |
|
|
|
country. The Code contains all the important aspects relevant to safe and orderly building |
|
|
|
development such as administrative regulations, development control rules and general building |
|
|
|
requirements; fire safety requirements; stipulations regarding materials, structural design and |
|
|
|
construction (including safety); and building and plumbing services. The boards of banks were |
|
|
|
advised to consider this aspect for incorporation in their loan policies. Similar guidelines were |
|
|
|
issued to RRBs on June 22, 2006. |
|
13 |
ï |
The Empowered Committees (EC) for RRBs, constituted by the Reserve Bank at its Regional Offices, |
|
|
|
would deliberate and make recommendation on the applications for opening, shifting or merger of |
|
|
|
branches of RRBs. The Reserve Bank would take into account the ECís recommendation and dispose |
|
|
|
of such applications expeditiously. Similarly, requests from RRBs for conduct of foreign exchange |
|
|
|
business, as limited authorised dealers for current account transactions, would be considered by |
|
|
|
the Reserve Bank after clearance by the EC. |
|
22 |
ï |
Revised norms issued to banks (excluding RRBs) on utilisation, creation, accounting and disclosures |
|
|
|
of floating provisions, i.e., provisions which are not made in respect of specific non-performing |
|
|
|
assets or are made in excess of regulatory requirement for provisions for standard assets. |
|
27 |
ï |
In order to start a robust state-of-the-art nationwide ECS covering more branches and locations |
|
|
|
with centralised data submission system, banks were advised to furnish certain information |
|
|
|
indicating their level of preparedness for the project. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2006 |
|
|
|
July |
4 |
ï |
Banks were advised to initiate steps for incorporating an appropriate mandate management routine |
|
|
|
for handling ECS (Debit) transactions. |
|
12 |
ï |
Banks were permitted to phase out the additional general provisioning on standard advances in |
|
|
|
specific sectors i.e., personal loans, loans and advances qualifying as capital market exposures, |
|
|
|
residential housing loans beyond Rs.20 lakh and commercial real estate loans. Additional |
|
|
|
provisioning requirement over the financial year 2006-07 would stand at (a) 0.55 per cent for the |
|
|
|
quarter ended June 2006; (b) 0.70 per cent for the half-year ending September 2006; (c) 0.85 per cent |
|
|
|
for the quarter ending December 2006; and (d) 1.00 per cent for the year ending March 2007. |
|
14 |
ï |
Banks were advised not to associate themselves with internet based electronic purse schemes which |
|
|
|
are in the nature of acceptance of deposits that can be withdrawn on demand. |
|
17 |
ï |
Banks were advised to ensure that all the farmersí loan-accounts in the notified districts, which are |
|
|
|
overdue as on July 01, 2006, are rescheduled on the lines of the package of ëRelief Measures to the |
|
|
|
Vidarbha Region in Maharashtraí announced by the Honíble Prime Minister and the interest thereon |
|
|
|
(as on July 01, 2006) is fully waived. Fresh finance may be ensured to such farmers. The total |
|
|
|
amount of credit of Rs.1,275 crore envisaged to be released by banks will be allocated by Bank of |
|
|
|
Maharashtra (as SLBC Convenor) among the banks functioning in the districts. |
|
20 |
ï |
Banks were advised to place service charges and fees on the homepage of their website at a prominent |
|
|
|
place under the title ëService Charges and Feesí so as to facilitate easy access by the bank customers. |
|
|
|
A complaint form, along with the name of the nodal officer for complaint redressal, may be provided |
|
|
|
in the homepage itself to facilitate complaint submission by the customers. The complaint form |
|
|
|
should also indicate that the first point for redressal of complaints is the bank itself and that |
|
|
|
complainants may approach the Banking Ombudsman only if the complaint is not resolved at the |
|
|
|
bank level within a month. |
August |
1 |
ï |
Accounting and related aspects for ëWhen Issuedí transactions in Central Government securities issued. |
|
3 |
ï |
A new district viz., Tarn Taran covering three tehsils, viz., Tarn Taran (200 villages), Khadoor |
|
|
|
Sahib (96 Villages) and Patti (197 Villages) has been carved out of the existing district of Amritsar |
|
|
|
with effect from June 16, 2006. Lead Bank responsibility of the new district has been assigned to |
|
|
|
Punjab National Bank. |
|
9 |
ï |
Additional guidelines issued on relief measures to be extended by banks in areas affected by natural |
|
|
|
calamities. |
|
|
ï |
Banks were advised that they need not maintain a separate SGL account for PD business. Banks |
|
|
|
undertaking PD business departmentally may maintain a single SGL account. They would, however, |
|
|
|
need to keep separate books of accounts internally for monitoring on an ongoing basis, maintenance |
|
|
|
of the minimum stipulated balance of Rs.100 crore of Government securities and for recording the |
|
|
|
transactions undertaken by the PD business. |
|
10 |
ï |
Guidelines were issued on penal rate of interest in case of default in maintaining stipulated balances |
|
|
|
under CRR. With effect from the fortnight beginning June 24, 2006 penal interest would be charged as |
|
|
|
follows: i) in cases of default in maintenance of CRR requirement on a daily basis, which is presently 70 |
|
|
|
per cent of the total CRR requirement, penal interest would be recovered for that day at the rate of |
|
|
|
three per cent per annum above the bank rate on the amount by which the amount actually maintained |
|
|
|
falls short of the prescribed minimum on that day; and if the shortfall continues on the next succeeding |
|
|
|
day/s, penal interest would be recovered at a rate of five per cent per annum above the Bank Rate; (ii) |
|
|
|
in cases of default in maintenance of CRR on average basis during a fortnight, penal interest would be |
|
|
|
recovered as envisaged in sub-section (3) of Section 42 of Reserve Bank of India Act, 1934. Similar |
|
|
|
guidelines were issued to RRBs on August 11, 2006. |
|
22 |
ï |
Banks permitted to offer internet based foreign exchange services, for certain transactions, in |
|
|
|
addition to the local currency products already allowed to be offered on internet based platforms, |
|
|
|
subject to certain conditions. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2006 |
|
|
|
August |
24 |
ï |
All banks were advised to recognise interest subsidy eligibility certificate issued by Khadi and |
|
|
|
Village Industries Commission (KVIC) for extending credit to khadi institutions and entrepreneurs, |
|
|
|
provided KVICís assessment for working capital requirement does not exceed the assessment made |
|
|
|
by banks by more than 10 per cent. |
|
|
ï |
To further improve customer service for outstation investors, half-yearly interest/ principal of relief/ |
|
|
|
savings bonds to investors may be made at a place of their choice, either by issue of a demand |
|
|
|
draft, free of cost, or an ëat parí cheque payable at all branches of the bank. |
September |
1 |
ï |
Within the overall target for priority sector lending and the sub-target of 10 per cent for the weaker |
|
|
|
sections, sufficient care should be taken to ensure that the minority communities also receive an |
|
|
|
equitable portion of the credit. The above requirement should be considered by lead banks while |
|
|
|
preparing district credit plans. |
|
|
ï |
In order to improve the quality of service available to customers in branches, banks were advised to ensure |
|
|
|
that full address/telephone number of the branch is invariably mentioned in the pass books/statement of |
|
|
|
accounts issued to account holders. Similar guidelines were issued to RRBs on September 15, 2006. |
|
4 |
ï |
It was clarified to the banks that instructions on moratorium, maximum repayment period, additional |
|
|
|
collateral for restructured loans and asset classification in respect of fresh finance will be applicable to |
|
|
|
all affected restructured borrowal accounts, including accounts of industries and trade, besides agriculture. |
|
|
|
Asset classification of the restructured accounts as on the date of natural calamity will continue if the |
|
|
|
restructuring is completed within a period of three months from the date of natural calamity. |
|
14 |
ï |
Banks were advised to delegate adequate powers to the bank managers for sanctioning loans without |
|
|
|
referring to higher authorities and following of the procedure for calculating interest on loans, |
|
|
|
excluding subsidy amount under SGSY Scheme. |
|
18 |
ï |
The name of ìChohung Bankî has been changed to ìShinhan Bankî in the Second Schedule to the |
|
|
|
Reserve Bank of India Act, 1934 with effect from August 12, 2006. |
|
20 |
ï |
Banks were advised that the exposure of banks to entities for setting up Special Economic Zones |
|
|
|
(SEZs) or for acquisition of units in SEZs which includes real estate would be treated as exposure |
|
|
|
to commercial real estate sector with immediate effect and banks would have to make provisions |
|
|
|
as also assign appropriate risk weights for such exposures as per the existing guidelines. |
|
|
ï |
Detailed instructions issued to Banks under Section 17(1) and 17(1)(b)(ii) of BR Act 1949 regarding |
|
|
|
transfer of profit to their Reserve Fund. |
October |
4 |
ï |
Banks were advised to invariably offer pass book facilities to all its savings bank account holders |
|
|
|
(individuals). In case the bank offers the facility of sending the statement of account and the customer |
|
|
|
chooses to get statement of account, the bank must issue monthly statement of accounts. Similar |
|
|
|
guidelines were issued to RRBs on October 13, 2006. |
|
5 |
ï |
Operational guidelines were issued for banks undertaking/proposing to undertake primary dealer business. |
|
11 |
ï |
Banks were advised that it would not be mandatory to put a clause in the guarantee issued by them, |
|
|
|
regarding an obligation on the part of the beneficiary of the guarantee to seek confirmation of the |
|
|
|
controlling office/head office. |
|
18 |
ï |
The banks were advised to ensure that all the loan accounts of the farmers in the specified districts which |
|
|
|
are overdue as on July 1, 2006 are rescheduled on the lines of package of relief measures for the debt |
|
|
|
stressed farmers of 25 districts in the states of Andhra Pradesh, Karnataka and Kerala. |
|
31 |
ï |
All SCBs (excluding RRBs) advised that in view of the current macroeconomic and overall monetary |
|
|
|
conditions, the fixed repo rate under the liquidity adjustment facility (LAF) of the Reserve Bank |
|
|
|
has been increased by 25 basis points with effect from Second LAF of October 31, 2006 to 7.25†per |
|
|
|
cent from 7.00 per cent. The reverse repo rate under the LAF remains unchanged at 6.00 per cent. |
|
|
|
All other terms and conditions of the current LAF Scheme will remain unchanged. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
|
|
|
B) Co-operative Banks |
2005 |
|
|
|
|
|
|
|
April |
11 |
ï |
The normal donations (for development of co-operative movement, charitable or any other public |
|
|
|
purpose) to be made during a year, in aggregate, to be restricted to a ceiling of one per cent of the |
|
|
|
published profits of the Urban Co-operative Banks (UCB) for the previous year. Such normal donations, |
|
|
|
together with those that may be made to national funds and other funds recognised/sponsored by the |
|
|
|
Central/State Governments, during a year, would not exceed two per cent of the published profits of the |
|
|
|
bank for the previous year. |
|
15 |
ï |
UCBs were advised to reduce the prudential exposure limits on advances to 15 per cent and 40 per |
|
|
|
cent of the ëCapital Fundsí in case of single borrower and group of borrowers, respectively. The |
|
|
|
definitions of capital funds and exposure were also modified for this purpose. UCBs are to bring |
|
|
|
down the outstanding or the sanctioned exposure limit exceeding the revised limit within a maximum |
|
|
|
period of two years, i.e., by March 31, 2007. |
|
19 |
ï |
UCBs, which have granted loans and advances against the guarantee/surety of the directors and/or |
|
|
|
their relatives prior to October 1, 2003, were advised that they may not unwind the position and |
|
|
|
may continue with the guarantee/surety of the directors and/or their relatives till the maturity of |
|
|
|
the facility. However, no fresh borrowals should be allowed by the UCBs with the guarantees/surety |
|
|
|
of their directors and/or their relatives. |
|
28 |
ï |
UCBs were advised to explore the option of merger/amalgamation wherever necessary for revitalising |
|
|
|
and rehabilitating the weak scheduled UCBs. |
May |
4 |
ï |
UCBs were advised to forward in the quarterly statement on ëconsolidated position of frauds |
|
|
|
outstandingí a footnote detailing the position of frauds outstanding in the housing loan segment, |
|
|
|
effective quarter ended March 2005. |
|
6 |
ï |
State Co-operative Banks (StCBs) and District Central Co-operative Banks (DCCBs) allowed to |
|
|
|
undertake insurance business on a referral basis, without any risk participation through their |
|
|
|
network of branches, subject to certain conditions. |
|
11 |
ï |
The eligibility to participate in repo market was extended to non-scheduled UCBs and listed |
|
|
|
companies, having a gilt account with a scheduled commercial bank subject to certain conditions. |
|
17 |
ï |
The investment limit in plant and machinery for the seven items belonging to sports goods which |
|
|
|
are already reserved for manufacture in SSI sector, as per Government of India, Gazette Notification |
|
|
|
No.SO 1109 (E) dated October 13, 2004, has been enhanced from Rs.1 crore to Rs.5 crore. UCBs |
|
|
|
were advised that the advances given to these units could be treated as priority sector lending. |
|
21 |
ï |
The statutory inspection of all UCBs to be carried out by the Reserve Bank with reference to the |
|
|
|
financial position as on March 31 immediately preceding the date of inspection and the gradation |
|
|
|
determined based thereon. However, inspection report should cover important developments having |
|
|
|
a significant bearing, subsequent to the reference date of inspection on the bankís financial health. |
June |
20 |
ï |
The non-scheduled UCBs having gilt account with an SGL Account holder permitted to participate |
|
|
|
in repo market, both repos and reverse repos, subject to conditions as prescribed for ready forward |
|
|
|
contracts (including reverse ready forward contracts). |
|
|
ï |
UCBs were advised to adopt a standardised settlement on T+1 basis of all outright secondary |
|
|
|
market transactions in Government securities with effect from May 25, 2005. In the case of repo |
|
|
|
transactions in Government securities, however, market participants will have the choice of settling |
|
|
|
the first leg on T+0 basis or T+1 basis, as per the requirement of participants. |
|
|
ï |
In order to facilitate further deepening of the Government securities market, the UCBs have been |
|
|
|
permitted to sell the Government securities allotted to successful bidders in primary issues on the |
|
|
|
day of allotment, with and between CSGL account holders. |
July |
4 |
ï |
UCBs having a single branch/head office with deposits upto Rs.100 crore and those having multiple |
|
|
|
branches within a single district with deposits upto Rs.100 crore were permitted to classify loan NPAs |
|
|
|
based on 180-day delinquency norm instead of the extant 90-day norm, till March 31, 2007. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2005 |
|
|
|
July |
12 |
ï |
In the light of the recommendations of the Committee on Procedure and Performance Audit on |
|
|
|
Public Services (CPPAPS) and to facilitate expeditious and hassle-free settlement of claims on the |
|
|
|
death of depositors,the procedure for settlement of claims in respect of deceased depositors was |
|
|
|
simplified and advised to StCBs and DCCBs. |
|
|
|
|
|
13 |
ï |
The norms relating to classification and valuation of investment portfolio of StCBs and DCCBs |
|
|
|
were modified, allowing them to amortise their additional provisioning requirement. |
|
|
|
|
|
|
ï |
Some relaxations have been given to those UCBs which have difficulty in implementing the revised |
|
|
|
credit exposure norms dated April 15, 2005 for sanction of fresh advances owing to the impact of |
|
|
|
past accumulated losses. Such UCBs were advised to approach the Reserve Bank explaining the |
|
|
|
issues involved and submit specific proposals for its consideration. |
|
|
|
|
|
14 |
ï |
The UCBs were advised to settle the claims in respect of deceased depositors and release payments |
|
|
|
to survivor(s)/ nominee(s) within a period not exceeding 15 days from the date of the receipt of the |
|
|
|
claim subject to the production of proof of death of the depositor and suitable identification of the |
|
|
|
claim(s). |
|
|
|
|
|
20 |
ï |
Acceptance of NRO deposits by UCBs to be phased out. The UCBs were advised not to accept any |
|
|
|
fresh deposits in the form of savings/current/recurring/term deposits and not to renew the existing |
|
|
|
recurring/term deposits on maturity with immediate effect. The existing current/savings deposits |
|
|
|
may be allowed to continue up to a period of six months. The accounts may be closed thereafter, |
|
|
|
with advance notice to the deposit holders. |
|
|
|
|
August |
3 |
ï |
In view of the unprecedented floods in Maharashtra and the need to provide immediate succour, |
|
|
|
UCBs were advised to observe minimum formalities for enabling such persons to open a bank |
|
|
|
account quickly. Similar guidelines were issued to StCBs and DCCBs on August 16, 2005. |
|
|
|
|
|
4 |
ï |
StCBs and DCCBs were advised to invest their genuine surplus funds in non-SLR securities without |
|
|
|
taking prior approval from the Reserve Bank on a case-to case basis, subject to a few conditions. |
|
|
|
|
|
9 |
ï |
UCBs were advised that the risk weight to be raised to i) 125.0 per cent (from 100.0 per cent) in |
|
|
|
case of loans extended against primary/collateral security of shares/debentures; ii) 127.5 per cent |
|
|
|
(from 102.5 per cent) in respect of investment in equities of AIFIs/units of UTI; and iii) to 125.0 per |
|
|
|
cent (from 100.0 per cent) in case of commercial real estate. |
|
|
|
|
|
23 |
ï |
The KYC procedure for opening accounts simplified further for UCBs for those persons who |
|
|
|
intend to keep balances not exceeding Rs.50,000 in all their accounts taken together and the total |
|
|
|
credit in all the accounts taken together is not expected to exceed Rs.1,00,000 in a year. UCBs |
|
|
|
may open accounts with introduction from another account holder (holding account for at least |
|
|
|
six months) who has been subjected to full KYC procedure or any other evidence as to identify |
|
|
|
and address of the customer to the satisfaction of the bank. Similar guidelines was issued to |
|
|
|
StCBs and DCCBs. |
|
|
|
|
September |
2 |
ï |
Grade II UCBs, which have been classified as such on account of net NPAs only, permited to declare |
|
|
|
dividend not exceeding 10 per cent provided they have made net profit for the current year and |
|
|
|
conform to certain other conditions as in the case of Grade III banks. |
|
|
|
|
|
17 |
ï |
Licensed and/or scheduled StCBs permitted to undertake, without risk participation, co-branded |
|
|
|
domestic credit card business with tie-up arrangement with one of the scheduled commercial banks, |
|
|
|
already having arrangement for issue of credit cards, subject to their fulfilling certain conditions. |
|
|
|
These conditions include, minimum positive net worth of Rs.50 crore, earning net profit for the |
|
|
|
last three years and not having accumulated losses, gross NPAs not exceeding 10 per cent, compliance |
|
|
|
of prudential and other norms stipulated by the Reserve Bank/NABARD and prior permission of |
|
|
|
the Reserve Bank. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2005 |
|
|
|
September |
29 |
ï |
UCBs were advised that 108 items have been de-reserved by the Government of India from the list |
|
|
|
of items reserved for exclusive manufacture by the SSIs. |
October |
6 |
ï |
Certain categories of directors of UCBs excluded from the purview of the guidelines prohibiting |
|
|
|
extension of any loans and advances (both secured and unsecured) to directors, their relatives and |
|
|
|
the firms/concerns/companies in which they are interested. |
|
10 |
ï |
The StCBs/DCCBs to furnish certain information in the form of ëNotes on Accountsí to their Balance |
|
|
|
Sheets from the year ending March 31, 2006. |
|
20 |
ï |
UCBs carrying accumulated losses in their balance sheet would not be eligible to make donations. |
|
21 |
ï |
The draft guidelines for set-off/adjustment of deposits against non-performing assets of UCBs working |
|
|
|
under directions have been forwarded to Registrar of Co-operative Societies of all States and Central |
|
|
|
Registrar of Co-operative Societies and they have been requested to issue the final guidelines in |
|
|
|
this regard keeping in view the provisions of the respective State Co-operative Societies Act and the |
|
|
|
Rules/Notification framed there under. |
November |
22 |
ï |
On a review, it has been decided that with effect from close of business in India on November 17, 2005, |
|
|
|
the interest rates on NRE savings deposits accounts for UCBs shall be at the rate applicable to domestic |
|
|
|
saving deposits. The interest rates on fresh repatriable Non-Resident (External) Rupee (NRE) term deposits |
|
|
|
for one to three years should not exceed LIBOR/SWAP rates, as on the last working day of the previous |
|
|
|
month, for US dollar of corresponding maturity plus 75 basis points. The interest rates so determined |
|
|
|
for three years deposits should also be applicable in case the maturity period exceeds three years. |
|
|
ï |
In order to smoothen the process of merger in the UCB sector, the acquirer UCB permitted to |
|
|
|
amortise the loss taken over from the acquired UCB over a period of not more than five years, |
|
|
|
including the year of merger. |
|
24 |
ï |
With a view to achieving the objective of greater financial inclusion, all UCBs to initiate steps within |
|
|
|
one month, to make available a basic banking ëno-frillsí account either with ënilí or very low minimum |
|
|
|
balances as well as charges and report to the Reserve Bank on a quarterly basis. Banks are also to |
|
|
|
give wide publicity to the facility of such a ëno-frillsí account, including on their web sites, indicating |
|
|
|
the facilities and charges in a transparent manner. Similar guidelines were issued to StCBs and |
|
|
|
DCCBs on December 13, 2005. |
|
|
ï |
The general provisioning requirement for ëstandard advancesí increased to 0.40 per cent from 0.25 per |
|
|
|
cent. However, direct advances to agriculture and SME sector which are standard assets, would attract a |
|
|
|
uniform provisioning requirement of 0.25 per cent of the funded outstanding on a portfolio basis, as |
|
|
|
hitherto. The higher provisioning requirements will be applicable for Unit banks and UCBs having multiple |
|
|
|
branches within a single district with deposits base of Rs.100 crore and above, and all other UCBs |
|
|
|
operating in more than one district. For other UCBs, the existing requirement of provisioning of 0.25 per |
|
|
|
cent for standard assets will continue. These provisions would be eligible for inclusion in Tier II capital |
|
|
|
for capital adequacy purposes upto the permitted extent as hitherto. |
|
30 |
ï |
All the UCBs have been advised to furnish the name, designation, e-mail address and the contact |
|
|
|
telephone numbers of Principal Officer (AML) appointed by the Director, Financial Intelligence |
|
|
|
Unit-India, Government of India. |
December |
5 |
ï |
The limit on unsecured advances by UCBs without surety, in respect of purchase/discount/withdrawal |
|
|
|
against third party cheques for a temporary period of 30 days in emergent cases, enhanced from |
|
|
|
Rs.5,000 to Rs.25,000 and Rs.10,000 respectively, for scheduled UCBs and unscheduled UCBs in |
|
|
|
Grade III and IV, while for those in grade other than III and IV the limit for scheduled and unscheduled |
|
|
|
UCBs were placed at Rs.50,000 and Rs.20,000 respectively. However, the ceiling on temporary |
|
|
|
unsecured advances without sureties for other class of unsecured advances, viz., clean bills, multani |
|
|
|
hundis, upto a period of 30 days, would however, continue to be limited to a maximum of Rs.5,000. |
|
|
|
The total unsecured advances (with surety and without surety) granted by a bank to its members |
|
|
|
should not exceed 15.0 per cent of its demand and time liabilities as against the present limit of |
|
|
|
33.3 per cent and a phased reduction in exposure was allowed till March 31, 2007. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2005 |
|
|
|
December |
23 |
ï |
With a view to minimise the delay in settling the claims of depositors, DICGC has reviewed the |
|
|
|
procedure followed in regard to appointment of Chartered Accountants (CAs) and fixing |
|
|
|
remuneration, for the UCBs. With a view to minimize the time lag in appointment of CAs, it is |
|
|
|
decided to consider fixing remuneration of CAs in terms of charge per depositor. |
|
30 |
ï |
StCBs and DCCBs to make available all printed material used by retail customers including account |
|
|
|
opening forms, pay-in-slips, passbooks etc. in trilingual form i.e., English, Hindi and the concerned |
|
|
|
Regional Language. |
2006 |
|
|
|
January |
9 |
ï |
UCBs were advised to take the benefit of the scheme for ëSmall Enterprises Financial Centresí on |
|
|
|
such terms as are mutually agreed to between them and SIDBI. |
|
19 |
ï |
StCBs/DCCBs have been advised to continue charging depreciation on computers on a straight-line method |
|
|
|
at the rate of 33.3 per cent per annum. Similar guidelines were issued to UCBs on January 24, 2006. |
|
23 |
ï |
Multi-State co-operative societies engaged in manufacturing activity permitted to raise external |
|
|
|
commercial borrowings (ECBs) under the Approval Route, provided that the society is financially |
|
|
|
solvent, submits its up-to-date audited balance sheet and the proposal complies with all other |
|
|
|
parameters of ECB guidelines. |
|
30 |
ï |
It has been clarified that in case of fully drawn term loans, where there is no scope for re-drawal of |
|
|
|
any portion of the sanctioned limit, UCBs may reckon the outstanding for arriving at credit exposure |
|
|
|
limit for the purpose of adhering to the exposure norms. |
|
|
ï |
UCBs prohibited from crediting ëaccount payeeí cheque to the account of any person other than the |
|
|
|
payee named therein. For crediting proceeds to third party i.e., other than to payee, UCBs can do |
|
|
|
so only after obtaining mandate on the cheque from the drawer. These instructions will also apply |
|
|
|
with respect to the cheque drawn by a bank payable to another bank. Similar guidelines were |
|
|
|
issued to StCBs and DCCBs on April 27, 2006. |
February |
17 |
ï |
It has been decided that the non-scheduled UCBís, having single branch-cum-head-office or having multiple |
|
|
|
branches within single district, having a deposit base of Rs.100 crore or less would be exempted from |
|
|
|
minimum SLR in the form of prescribed assets up to maximum of 15 per cent of their demand and time |
|
|
|
liabilities (DTL) to the extent of the amounts deposited by them with State Bank of India, subsidiary |
|
|
|
banks, corresponding new bank and IDBI Ltd. This exemption will be in force upto March 31, 2008. |
|
|
ï |
In order to offer small borrowers an opportunity to settle their NPA accounts with UCBs and become |
|
|
|
eligible for fresh finance, Chief Secretaries of the States were advised to consider notifying, a |
|
|
|
simplified mechanism for one-time settlement of loans where the principal amount is equal to or |
|
|
|
less than Rs.25,000 and which have become doubtful and loss assets as on September 30, 2005. |
March |
2 |
ï |
UCBs were advised that while considering granting advances against jewellery they may keep in |
|
|
|
view the advantages of hallmarked jewellery and decide on the margin and rates of interest thereon. |
|
|
|
Similar guidelines were issued to StCBs and DCCBs on March 9, 2006. |
|
3 |
ï |
StCBs and DCCBs were advised to comply with the provisions of Prevention of Money Laundering |
|
|
|
Act (PMLA), 2002 and the Rules notified there under on July 1, 2005. The Rules include, maintenance |
|
|
|
of records of transactions, preservation of information and reporting to Financial Intelligence Unit- |
|
|
|
India. Similar guidelines were issued to UCBs on March 21, 2006. |
|
9 |
ï |
UCBs were advised to install dual display note counting machines at the payment counters of their |
|
|
|
branches for the use of their customers towards building confidence in the minds of the public to |
|
|
|
accept note packets secured with paper bands. |
|
|
ï |
As a part of announcement made by Honíble Finance Minister for improving flow of credit to small |
|
|
|
and medium enterprises, certain guidelines covering inter alia, eligibility and viability criteria for |
|
|
|
restructuring of debts and the consequential effects of such restructuring on classification of these |
|
|
|
assets were issued to the UCBs. Such dispensation of asset classification should be made available |
|
|
|
only when the account is restructured for the first time. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2006 |
|
|
|
March |
21 |
ï |
Based on the half-yearly review by NABARD, StCBs/DCCBs were advised to take appropriate action |
|
|
|
in the following areas, including i) conduct of the half-yearly review of investment portfolio; ii) |
|
|
|
framing of investment policy; iii) preparation of approved panel of brokers; iv) placing of funds as |
|
|
|
deposits with PSUs/Companies/Corporations/UCBs/NBFCs etc.; v) quarterly certificate of securities |
|
|
|
actually held;vi) irregularities in non-SLR investments; vii) submission of concurrent audit of SLR |
|
|
|
investment portfolio and the monthly audit of treasury transactions to NABARD/RBI; and viii) |
|
|
|
violation of Section 19 of the B.R. Act, 1949 (aACS) relating to investments in shares of other co- |
|
|
|
operative institutions. |
|
24 |
ï |
The currency chest facility was extended to scheduled UCBs which are registered under Multi-State |
|
|
|
Co-operative Societies Act, 2002 and to the UCBs under the State Acts, where the State Governments |
|
|
|
concerned have assured regulatory co-ordination by entering into MOU with the Reserve Bank. The |
|
|
|
eligibility norm in this regard was also laid down. |
|
29 |
ï |
UCBs were permitted on an ongoing basis to exceed the limit of 25 per cent of their total |
|
|
|
investments under HTM category provided: i) the excess comprises only of SLR securities; and ii) |
|
|
|
the total SLR securities held in the HTM category is not more than 25 per cent of their NDTL as |
|
|
|
on the last Friday of the second preceding fortnight. Further relaxations include: i) as a special |
|
|
|
case, shifting of securities from and to HTM once more on or before March 31, 2006; ii) the |
|
|
|
provision required to be made is the difference between book value and face value when the |
|
|
|
market value is lower than the face value; iii) provision may be spread over the remaining period |
|
|
|
to maturity, instead of five years; and iv) in case, as a result of valuation as above, the provision |
|
|
|
already held by the bank is rendered surplus, the same should not be taken to the Profit and |
|
|
|
Loss account. |
April |
13 |
ï |
UCBs registered in states, which have signed MoU and those registered under the Multi-State Co- |
|
|
|
operative Societies Act, 2002 may enter into agreements with mutual funds for marketing their |
|
|
|
units subject to the certain conditions, including i) the UCB should act as an agent of the customers, |
|
|
|
ii) the purchase of MF units should be at the customersí risk and without the UCB guaranteeing any |
|
|
|
assured return, iii) the UCB should not acquire such units of mutual fund from the secondary |
|
|
|
market, iv) the UCB should not buy back units of mutual funds from the customers, and v) the UCB |
|
|
|
should ensure compliance with extant KYC/AML guidelines. |
|
28 |
ï |
In order to enable better customer service, UCBs were advised to undertake following limited |
|
|
|
transactions at the extension counters: i) deposit/withdrawal transactions, ii) issue and encashment |
|
|
|
of drafts and mail transfers, iii) issue and encashment of travellersí cheques, iv) collection of bills, |
|
|
|
v) advances against fixed deposits of their customers (within the sanctioning power of the concerned |
|
|
|
officials at the Extension Counter), and vi) disbursement of other loans (only for individuals) |
|
|
|
sanctioned by the Head Office / base branch up to the limit of Rs.10 lakh. |
|
|
ï |
UCBs were permitted to set up ATMs subject to the following eligibility criteria: i) minimum deposits |
|
|
|
of Rs.100 crore, ii) compliance with the prescribed CRAR, iii) net NPAs less than 10 per cent, and |
|
|
|
iv) consistent record of profitability and compliance with CRR/SLR. Among others, the requirement |
|
|
|
of prior approval of the Reserve Bank for network connectivity and/or sharing of the ATMs installed |
|
|
|
by UCBs has also been dispensed with. |
May |
26 |
ï |
UCBs were advised to display and update, on their website, the details of various service charges in |
|
|
|
the prescribed format. UCBs are also to display the charges relating to certain services as prescribed |
|
|
|
in their offices/branches. This may also be displayed in the local language. |
June |
1 |
ï |
The risk weight on UCBsí exposure to the commercial real estate increased to 150 per cent from |
|
|
|
125 per cent. |
|
6 |
ï |
StCBs and DCCBs permitted to open savings bank accounts in the names of State Government |
|
|
|
departments/bodies/agencies in respect of grants/subsidies released for implementation of various |
|
|
|
programmes/schemes sponsored by State Governments on production of an authorisation to the |
|
|
|
bank from the respective Government departments certifying that the concerned Government |
|
|
|
department or body has been permitted to open savings bank account. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2006 |
|
|
|
June |
15 |
ï |
The general provisioning requirement on standard advances in specific sectors, i.e., personal loans, |
|
|
|
loans and advances qualifying as capital market exposures, residential housing loans beyond Rs.20 |
|
|
|
lakh and commercial real estate loans increased to 1.0 per cent from the present level of 0.40 per |
|
|
|
cent. The revised norms were made applicable for UCBs (Unit banks and banks having multiple |
|
|
|
branches within a single district with deposit of Rs.100 crore and above and all other UCBs operating |
|
|
|
in more than one district) on June 15, 2006. |
|
19 |
ï |
Bureau of Indian Standards (BIS) has formulated a comprehensive building Code namely National Building |
|
|
|
Code (NBC) of India 2005, providing guidelines for regulating the building construction activities across |
|
|
|
the country. The Code contains all the important aspects relevant to safe and orderly building development |
|
|
|
such as administrative regulations, development control rules and general building requirements; fire |
|
|
|
safety requirements; stipulations regarding materials, structural design and construction (including safety); |
|
|
|
and building and plumbing services. Banksí Boards may consider this aspect for incorporation in their |
|
|
|
loan policies. Similar guidelines were issued to StCBs and DCCBs on June 26, 2006. |
July |
11 |
ï |
Investments that may be made by UCBs on or after April 1, 2007 in the bonds issued by NHB/ |
|
|
|
HUDCO shall not be eligible for classification under priority sector lending. |
|
21 |
ï |
UCBs to ensure that all the farmersí loan-accounts in notified districts, which are overdue as on |
|
|
|
July 01, 2006, are rescheduled on the lines of the package of ìRelief Measures to the Vidarbha |
|
|
|
Region in Maharashtraî announced by the Honíble Prime Minister and the interest thereon (as on |
|
|
|
July 01, 2006) is fully waived. Fresh finance may be ensured to such farmers. The total amount of |
|
|
|
credit of Rs.1,275 crore envisaged to be released by banks will be allocated by Bank of Maharashtra |
|
|
|
(as SLBC Convenor) among the banks functioning in the districts. |
|
24 |
ï |
UCBs to place service charges and fees on the homepage of their website at a prominent place under the |
|
|
|
title ëService Charges and Feesí so as to facilitate easy access by the UCB customers. A complaint form, |
|
|
|
along with the name of the nodal officer for complaint redressal, may be provided in the homepage itself |
|
|
|
to facilitate complaint submission by the customers. The complaint form should also indicate that the |
|
|
|
first point for redressal of complaints is the bank itself and that complainants may approach the Banking |
|
|
|
Ombudsman only if the complaint is not resolved at the bank level within a month. |
|
26 |
ï |
UCBs not to associate themselves with internet based electronic purse schemes which are in the |
|
|
|
nature of acceptance of deposits that can be withdrawn on demand. Similar guidelines were issued |
|
|
|
to StCBs and DCCBs on August 7, 2006. |
August |
11 |
ï |
StCBs advised that with effect from the fortnight beginning June 24, 2006 penal interest in case of default |
|
|
|
in maintaining stipulated balances under CRR would be charged as follows: i) in cases of default in |
|
|
|
maintenance of CRR requirement on a daily basis, which is presently 70 per cent of the total Cash |
|
|
|
Reserve Ratio requirement, penal interest would be recovered for that day at the rate of three per cent per |
|
|
|
annum above the bank rate on the amount by which the amount actually maintained falls short of the |
|
|
|
prescribed minimum on that day and if the shortfall continues on the next succeeding day/s, penal |
|
|
|
interest would be recovered at a rate of five per cent per annum above the bank rate; (ii) in cases of |
|
|
|
default in maintenance of CRR on average basis during a fortnight, penal interest would be recovered as |
|
|
|
envisaged in sub-section (3) of Section 42 of Reserve Bank of India Act, 1934. Similar guidelines were |
|
|
|
issued to scheduled UCBs on August 16, 2006. |
|
18 |
ï |
Accounting and related aspects for ëWhen Issuedí transactions in Central Government issued to UCBs. |
September |
4 |
ï |
Guidelines issued to UCBs on relief measures to be extended in areas affected by natural calamities. |
|
22 |
ï |
In order to improve the quality of service available to customers in branches, StCBs/DCCBs were |
|
|
|
advised to ensure that full address/telephone number of the branch is invariably mentioned in the |
|
|
|
pass books/statement of accounts issued to account holders. |
|
26 |
ï |
UCBs were advised to furnish the data on frauds, thefts, burglaries etc., in format FMR ñ 2, 3, and |
|
|
|
4 on a quarterly basis to the Regional Offices of the Reserve Bank within 15 days of the end of the |
|
|
|
quarter to which the data relates. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2006 |
|
|
|
October |
6 |
ï |
UCBs were advised to ensure that full address/telephone numbers of the branch is invariably |
|
|
|
mentioned in the Pass Books/Statement of Accounts issued to account holders. |
|
11 |
ï |
StCBs/DCCBs were advised to invariably offer pass book facilities to all its account holders (individuals). |
|
|
|
Similar guidelines were issued to UCBs on October 16, 2006. |
|
17 |
ï |
UCBs were advised that within the overall target for priority sector lending and the sub-target of 25 |
|
|
|
per cent for the weaker sections, sufficient care should be taken to ensure that the minority |
|
|
|
communities also receive an equitable portion of the credit. |
|
|
ï |
UCBs allowed to extend individual housing loan upto the limit of Rs.25 lakh per beneficiary of a |
|
|
|
dwelling unit. However housing loans above Rs.15 lakh will not be treated as priority sector lending. |
|
|
|
The present stipulation that the amount of instalment and interest should not exceed 30 per cent of |
|
|
|
the income of the borrowers stands dispensed with. |
|
|
|
C) Financial Institutions (FIs) |
2005 |
|
|
|
April |
26 |
ï |
A minimum framework for disclosures by FIs on their risk exposures in derivatives laid out to |
|
|
|
provide a clear picture of their exposure to risks in derivatives, risk management systems, objectives |
|
|
|
and policies. |
|
27 |
ï |
FIs not accepting public deposits but having asset size of Rs.500 crore and above would be subjected |
|
|
|
to limited off-site supervision by the Reserve Bank. Therefore, with effect from the period ended |
|
|
|
March 31, 2005, the existing system of off-site supervision would stand replaced by a simplified |
|
|
|
information system known as the ëQuarterly Return on Important Financial Parameters in respect |
|
|
|
of Select Financial Institutionsí. |
November |
22 |
ï |
FIs were advised that guidelines on one time settlement scheme for SME accounts issued to public |
|
|
|
sector banks should be uniformly implemented as applicable. |
December |
6 |
ï |
The general provisioning requirement for ëstandard advancesí, with the exception of direct advances |
|
|
|
to agricultural and SME sectors, increased from the present level of 0.25 per cent to 0.40 per cent |
|
|
|
for the FIs. |
2006 |
|
|
|
|
|
|
|
February |
2 |
ï |
Guidelines on securitisation of standard assets issued to FIs. The guidelines include definitions |
|
|
|
and norms relating to true sale, criteria to be met by SPV, special features including representations |
|
|
|
and warranties and re-purchase of assets from SPVs, policy on provision of credit enhancement, |
|
|
|
liquidity and underwriting facilities, policy on provision of services, prudential norms for |
|
|
|
investment in the securities issued by SPV, accounting treatment of the securitisation transactions, |
|
|
|
disclosures, etc. |
|
|
|
D) Non-Banking Financial Companies (NBFCs) |
2005 |
|
|
|
|
|
|
|
April |
28 |
ï |
Guidelines on merger and amalgamation between private sector banks and NBFCs issued.†The |
|
|
|
guidelines cover the process of merger proposal, determination of swap ratios, disclosures, norms |
|
|
|
for buying/selling of shares by promoters before and during the process of merger and the Boardís |
|
|
|
involvement in the merger process. The principles underlying these guidelines would be applicable |
|
|
|
as appropriate to public sector banks, subject to relevant legislation. |
September |
6 |
ï |
NBFCs not accepting/holding public deposits and having assets size of ëRs.100 crore and above to |
|
|
|
submit a monthly return that was applicable so far to NBFCs not accepting/holding public deposits |
|
|
|
and having assets size of Rs.500 crore and above. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2005 |
|
|
|
October |
11 |
ï |
NBFCs to ensure full compliance with KYC guidelines with regard to deposits collected by persons |
|
|
|
authorised by the NBFCs including brokers/agents etc., inasmuch as such persons are collecting |
|
|
|
the deposits on behalf of the NBFCs. |
|
21 |
ï |
NBFCs to have a well documented policy and a Fair Practices Code for credit card operations. The |
|
|
|
Fair Practices Code for credit card operations released by IBA in March 2005 could be adopted by |
|
|
|
NBFCs for this purpose. Guidelines include norms relating to issue of cards, interest rate and |
|
|
|
other charges, wrongful billing, use of DSAs / DMAs and other agents, protection of customer |
|
|
|
rights, right to privacy, customer confidentiality, fair practices in debt collection, redressal of |
|
|
|
grievances, internal control and monitoring system, and right to impose penalty. |
|
26 |
ï |
Guidelines were issued to all deposit taking NBFCs (including RNBCs) that all individual cases of frauds |
|
|
|
involving amount less than Rs.25 lakh may be reported to the respective Regional Offices of the Department |
|
|
|
of Non Banking Supervision in whose jurisdiction, registered office of the company is located, whereas |
|
|
|
individual cases of frauds involving amount of Rs.25 lakh and above may be reported to Frauds Monitoring |
|
|
|
Cell, Department of Banking Supervision, Central Office, Reserve Bank, Mumbai. |
December |
9 |
ï |
It was clarified by the Reserve Bank that in case of premature repayment of deposits, the clause |
|
|
|
relating to clubbing of all deposit accounts, standing to the credit of sole/first named depositor in |
|
|
|
the same capacity, for the purpose of premature repayment/grant of loan, as the case may be, of an |
|
|
|
amount upto Rs.10,000 to the depositor is applicable only in case of problem NBFC/RNBC/MNBC. |
|
|
|
In case of death of depositor, even the problem NBFC/RNBC/MNBC may repay the deposit/public |
|
|
|
deposit within the lock-in period without clubbing of deposit/public deposit. |
|
12 |
ï |
NBFCs (including RNBCs) with public deposits/deposits of Rs.50 crore and above were advised |
|
|
|
that it would be desirable if such NBFCs stipulate that the partners of the Chartered Accountant |
|
|
|
firm conducting the audit be rotated every three years so that the same partner does not conduct |
|
|
|
audit of the company continuously for more than a period of three years. However, the partner so |
|
|
|
rotated will be eligible for conducting the audit of the NBFC/RNBC after an interval of three years, |
|
|
|
if the NBFC/RNBC, so decides. NBFC/RNBCs were advised to incorporate appropriate terms in the |
|
|
|
letter of appointment of the firm of auditors and ensure its compliance. |
|
27 |
ï |
It was decided not to call for returns in First schedule annexed to Miscellaneous Non-Banking |
|
|
|
Companies (Reserve Bank) Directions, 1977 from the Miscellaneous Non-Banking Companies which |
|
|
|
were not holding/accepting deposits. |
2006 |
|
|
|
January |
24 |
ï |
The norms relating to prior public notice about the change in the control/management of the company of |
|
|
|
the NBFCs (deposit taking and non-deposit taking) relaxed where merger and amalgamation takes place |
|
|
|
in terms of the High Court order in pursuance of Sections 391 and 394 of the Companies Act, 1956. |
February |
2 |
ï |
Guidelines on securitisation of standard assets issued to NBFCs (including RNBCs). The guidelines |
|
|
|
include definitions and norms relating to true sale, criteria to be met by SPV, special features |
|
|
|
including representations and warranties and re-purchase of assets from SPVs, policy on provision |
|
|
|
of credit enhancement, liquidity and underwriting facilities, policy on provision of services, |
|
|
|
prudential norms for investment in the securities issued by SPV, accounting treatment of the |
|
|
|
securitisation transactions and disclosures. |
March |
7 |
ï |
It was decided to further simplify the KYC procedure for opening accounts by NBFCs for those persons |
|
|
|
who intend to keep balances not exceeding Rs.50,000 in all their accounts taken together and the total |
|
|
|
credit in all the accounts taken together is not expected to exceed Rs.1,00,000 in a year. In respect of such |
|
|
|
persons, NBFCs may open accounts subject to introduction from another account holder who has been |
|
|
|
subjected to full KYC procedure or any other evidence as to the identity and address of the customer to |
|
|
|
the satisfaction of the NBFC. |
|
22 |
ï |
Pending the exercise of examining the eligibility criteria of NBFCs who can be assigned the role of |
|
|
|
Business Correspondent/s, the scheduled commercial banks to defer selection/use of NBFCs as |
|
|
|
Business Correspondent/s. However, they can use NBFCs licensed under Section 25 of the Companies |
|
|
|
Act, 1956 as Business Correspondents. |
|
Annex: Chronology of Major Policy Developments (Continued) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2006 |
|
|
|
March |
31 |
ï |
The investment pattern contained in the RNBC Directions were modified as under with effect from |
|
|
|
April 1, 2006: (i) not less than 10 per cent of the ALD in the manner prescribed under paragraph |
|
|
|
6(1)(a) of the RNBC Directions, 1987; (ii) not less than 75 per cent of the ALD in the manner prescribed |
|
|
|
under paragraph 6(1)(b) of the RNBC Directions, 1987; and (iii) not more than 5 per cent of the ALD as |
|
|
|
on December 31, 2005 or one-time of net owned fund of the company, whichever is less in the manner |
|
|
|
prescribed under paragraph 6(1)(c) of the RNBC Directions, 1987 for discretionary investments upto |
|
|
|
March 31, 2007. After March 31, 2007 RNBCs shall invest in accordance with paragraph 6(a) and (b) |
|
|
|
of the RNBC Directions, 1987 only and there will be no discretionary investment from April 1, 2007. |
April |
5 |
ï |
Certain changes were made in the format of monthly return to be submitted by the NBFCs not |
|
|
|
accepting/holding public deposits and having assets size of Rs.100 crore and above to include |
|
|
|
parameters such as cumulative position in Profit and Loss Account, age-wise break up of NPAs, |
|
|
|
highest outstanding balance of working capital, certain additional information on capital market |
|
|
|
exposure of the company and foreign sources of funds. |
|
|
ï |
NBFCs, MNBCs and RNBCs to go through the provisions of Prevention of Money Laundering Act |
|
|
|
(PMLA), 2002 and the Rules notified there under on July 1, 2005 and take all steps considered |
|
|
|
necessary to ensure compliance. The Rules include, maintenance of records of transactions, |
|
|
|
preservation of information and reporting to Financial Intelligence Unit-India. |
September |
20 |
ï |
While calculating the aggregate of funded exposure of a borrower for the purpose of assignment of risk |
|
|
|
weight, NBFCs may ënet-offí against the total outstanding exposure to the borrower advances standardised |
|
|
|
by cash margins/security deposits/caution money against which right to set off is available. |
|
|
ï |
Securitisation Companies or Reconstruction Companies should invest in security receipts an amount |
|
|
|
not less than five per cent issued under each scheme with immediate effect. In the case of |
|
|
|
Securitisation Companies or Reconstruction Companies, which have already issued the security |
|
|
|
receipts, such companies shall achieve the minimum subscription limit in security receipts under |
|
|
|
each scheme, within a period of six months from the date of Notification issued in this regard. |
|
28 |
ï |
NBFCs issued comprehensive instructions under Sec(45) of RBI Act 1934 to frame broad guidelines |
|
|
|
on fair practice code approved by their Board of Directors and the same should be published and |
|
|
|
disseminated on the website of the company for information of the public. |
October |
19 |
ï |
A Securitisation Company or Reconstruction Company, which has obtained a Certificate of |
|
|
|
Registration from the Reserve Bank under Section 3 of the Securitisation and Reconstruction of |
|
|
|
Financial Assets and Enforcement of Security Interest Act, 2002 should commence business within |
|
|
|
six months from the date of grant of Certificate of Registration. The Reserve Bank may, on an |
|
|
|
application made by the Securitisation Company or Reconstruction Company, grant extension of |
|
|
|
time for commencement of business beyond six months, on merits, but in no case, such extension |
|
|
|
of time shall exceed 12 months from the date of grant of Certificate of Registration. |
|
27 |
ï |
It has been clarified that prior public notice about change in control/management should be given |
|
|
|
by the NBFC and also by the transferor or the transferee or jointly by the parties concerned. |
|
|
|
E) Primary Dealers (PDs) |
2005 |
|
|
|
May |
11 |
ï |
Guidelines were issued on adoption of standardised settlement on T+1 basis for all outright |
|
|
|
secondary market transactions in Government securities. |
|
|
ï |
Guidelines were issued permitting sale of Government Securities allotted to successful bidders in |
|
|
|
primary issues on the day of allotment, with and between CSGL constituent account holders. |
|
|
ï |
The eligibility to participate in repo market was extended to non-scheduled UCBs and listed |
|
|
|
companies, having a gilt account with a scheduled commercial bank, subject to certain conditions. |
|
19 |
ï |
Underwriting bids allowed to be submitted electronically on PDO-NDS application. Underwriting |
|
|
|
commission credited to current account of PD on the date of settlement of auction. |
|
Annex: Chronology of Major Policy Developments (Concluded) |
|
|
|
|
Announcement |
|
Measures |
Date |
|
|
|
2005 |
|
|
|
|
|
|
|
July |
20 |
ï |
Guidelines on transaction in Government Securities were further relaxed by permitting a buyer |
|
|
|
from an allottee in primary auction to re-sell the security. |
August |
22 |
ï |
Guidelines issued dispensing with the need to obtain counterparty confirmation in respect of deals |
|
|
|
matched on NDS-OM since CCIL is the counter-party in such transactions. |
2006 |
|
|
|
February |
27 |
ï |
Banks, both Indian and foreign, which fulfill certain eligibility criteria, permitted to undertake PD |
|
|
|
business departmentally. |
|
28 |
ï |
Guidelines issued permitting banks and PDs to undertake intra-day short sale in Central Government |
|
|
|
dated security subject to the same being covered by outright purchase in secondary market within |
|
|
|
the same trading day. |
April |
4 |
ï |
Guidelines issued on Revised Scheme of Underwriting Commitment and Liquidity Support for PDs |
|
|
|
and banks undertaking PD business departmentally in the wake of coming into effect the provisions |
|
|
|
of the Fiscal Responsibility and Budget Management Act (FRBM) 2003. |
May |
3 |
ï |
Guidelines issued permitting NDS-OM members to enter into ëWhen Issuedí transactions in Central |
|
|
|
Government Securities that have been notified for issuance but not actually issued. |
July |
4 |
ï |
Guidelines issued permitting stand-alone PDs to diversify their activities in addition to existing |
|
|
|
business of Government securities, subject to limits. |
October |
5 |
ï |
Operational guidelines issued for banks undertaking/proposing to undertake PD business. |
|
31 |
ï |
PDs advised that the fixed repo rate under LAF has been revised to 7.25 per cent. Accordingly, the |
|
|
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Standing Liquidity Facilities provided to PDs from the Reserve Bank would be available at repo |
|
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rate, i.e., 7.25 per cent with immediate effect. |
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