RbiSearchHeader

Press escape key to go back

Past Searches

Theme
Theme
Text Size
Text Size
S2

Notification Marquee

RBI Announcements
RBI Announcements

RbiAnnouncementWeb

RBI Announcements
RBI Announcements

Asset Publisher

55333639

Bills discounted under LC - Risk Weight and Exposure Norms - UCBs

RBI/2005-06/367

UBD.(PCB).BPD.Cir No: 46/13.05.000/2005-06

April 19, 2006

The Chief Executive Officers of

All Primary (urban) Co-operative Banks

Dear Sir/Madam,

Bills discounted under LC – Risk Weight and Exposure Norms - UCBs

Please refer to our circular UBD.BPD.PCB.cir. 37/13.05.00/2003-04 dated March 16, 2004. In terms of para 2 (iv) of the circular, the credit exposure on account of bills purchased / discounted / negotiated under LCs or otherwise should be reckoned on the bank’s borrower constituent. Accordingly, the exposure should attract a risk weight appropriate to the borrower constituent (viz. 100% for firms, individuals, corporate, etc.) for capital adequacy purposes.

2. The above instructions have been reviewed and it has now been decided that :

i. Bills purchased / discounted / negotiated under LC (where the payment to the beneficiary is not made ‘under reserve’) will be treated as an exposure on the LC issuing bank and not on the borrower.

ii. All clean negotiations as indicated above in para (i) above, will be assigned the risk weight as is normally applicable to inter-bank exposures, for capital adequacy purposes.

iii. In the case of negotiations ‘under reserve’ the exposure should be treated as on the borrower and risk weight assigned accordingly.

3. The above guidelines will come into operation with immediate effect.

4. Please acknowledge receipt to the concerned Regional Office of Reserve Bank of India.

Yours faithfully,

(N.S.Vishwanathan)
Chief General Manager in-Charge

RbiTtsCommonUtility

PLAYING
LISTEN

Related Assets

RBI-Install-RBI-Content-Global

RbiSocialMediaUtility

Install the RBI mobile application and get quick access to the latest news!

Scan Your QR code to Install our app

RbiWasItHelpfulUtility

Was this page helpful?