Regulatory and Other Measures

March 2009

RBI/2008-09/407 Ref. No. UBD.PCB.Cir.No. 54/13.05.000/2008-09 dated March 9, 2009

The Chief Executive officers of all Primary (Urban) Co-operative Banks

Agricultural Debt Waiver and Debt Relief Scheme, 2008 – Prudential Norms on Income Recognition, Asset Classification, Provisioning and Capital Adequacy

Please refer to our circular UBD.PCB.Cir.No. 5/13.05.000/08-09 dated July 30, 2008 and UBD.PCB.Cir.No. 27/13.05.000/08-09 dated November 17, 2008 on the captioned subject.

2. In this regard, we advise that under the captioned scheme, the Government of India has since decided to extend the last date of repayment of first instalment by the “other farmers” under the Debt Relief Scheme from September 30, 2008 to March 31, 2009. The dates of payment of second and third instalments remain unchanged at March 31, 2009 and June 30, 2009. All other terms of the aforesaid circulars remain unchanged.

3. It is also clarified that the additional period of one month from the pre-specified due dates, permitted to the farmers eligible under the Debt Relief Scheme, for paying their share of the settlement, without affecting the standard asset classification status of the relevant account, shall be available only for the first two instalments viz. those due on March 31, 2009. However, no grace period is allowed for the last instalment and the entire share of the farmer is payable by June 30, 2009 itself, in order to maintain the eligibility of the ‘other farmers’ for Debt Relief Scheme and to retain the standard asset classification status.

RBI/2008-09/403 Ref. No. UBD.PCB. BPD. No. 53 /13.05.000 / 2008-09 dated March 6, 2009

The Chief Executive Officer of all Primary (Urban) Co-operative Banks

Prudential Guidelines on Restructuring of Advances by UCBs.

Please refer to the prudential guidelines on income recognition, asset classification and provisioning in respect of restructured accounts issued to Urban Cooperative Banks on November 12, 2001. As part of announcement made by the Hon’ble Finance Minister in 2005, separate guidelines were also issued for restructuring of debt of all eligible Small and Medium Enterprises (SMEs) in order to improve the flow of credit to the small scale sector.

2. In view of the current economic downturn and the spillover effects of the global recession on the Indian economy particularly from September 2008 onwards, which has created stress on liquidity and payments for the otherwise viable units/ activities, certain modifications in the guidelines are considered necessary. The matter has been reviewed and it has now been decided to introduce revised guidelines on restructuring of advances and also realign the extant instructions on the Debt Restructuring Mechanism for SMEs.

3. The revised guidelines on restructuring of advances are enclosed. These guidelines are in supercession of all the guidelines issued on the subject so far and will be applicable to all accounts restructured after the date of issue of the circular.

RBI/2008-09/445 Ref. No. MPD.BC. 321/ 07.01.279/ 2008-09 dated April 21, 2009

All Schedule Banks [excluding Regional Rural Banks] and Primary Dealers

Standing Liquidity Facilities for Banks and Primary Dealers

Please refer to the Reserve Bank’s Annual Policy Statement 2009-2010 dated April 21, 2009, in terms of which the fixed repo rate under the Liquidity Adjustment Facility (LAF) has been reduced by 25 basis points from 5.0 per cent to 4.75 per cent with immediate effect.

Accordingly, the Standing Liquidity Facilities provided to banks (export credit refinance) and Primary Dealers (PDs) (collateralised liquidity support) from the Reserve Bank would be available at the revised repo rate, i.e., at 4.75 per cent with effect from April 21, 2009.