RBI Circular Notification Press Release and Instructions issued by Reserve bank of India. News and Article on provisions, Rate changes, Policy changes and FAQ
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Banks intending to move to any of the IRB approaches for computing capital charge for credit risk are advised to assess their preparedness for the same with reference to these guidelines. If a bank feels that it is prepared to adopt IRB approaches as per these guidelines, it may submit a letter of intention and its Board’s approval for adoption of IRB approach for credit risk to RBI (Chief General Manager-in-Charge, Reserve Bank of India, Department of Banking Operations and Development, Central Office, 12th Floor, Shahid Bhagat Singh Road, Mumbai – 400001), along with a gist of self assessment report between April 1, 2012 and June 30, 2012.
Ref.DBOD.Ret..BC. No.66/12.06.001/2011-12 We advise that the name of State Bank of India Commercial and International Bank Limited has been excluded from the Second Schedule to the Reserve Bank of India Act, 1934 by notification DBOD.No.Ret.BC.35/12.06.059/2011-12 dated September 26, 2011, published in the Gazette of India (Part III – Section-4) dated October 29 – November 04, 2011.
It has been decided to permit banks to avail themselves of funds from RBI on overnight basis, under Marginal Standing Facility (MSF), against their excess SLR holdings. Additionally, they can also avail themselves of funds, on overnight basis below the stipulated SLR, up to one per cent of their respective Net Demand and Time Liabilities outstanding at the end of second preceding fortnight. In the event the banks’ SLR holdings fall below the statutory requirement, banks will not have the obligation to seek a specific waiver for default in SLR compliance arising out of use of this facility in terms of notification issued under sub section (2A) of Section 24 of the Banking Regulation Act, 1949.
In terms of paragraph 2 of the circular dated February 18, 2005 and paragraph 2 of the circular dated January 12, 2011, RRBs are required to prepare a risk profile of each customer and apply enhanced due diligence measures on higher risk customers. Some illustrative examples of customers requiring higher due diligence have also been provided in the paragraph under reference.Further, paragraph 5 of the circular dated February 18,2005requires RRBs to put in place policies, systems and procedures for risk management keeping in view the risks involved in a transaction, account or banking/business relationship.
The recent past has been a challenging time for the banking sector in India. You, along with the entrepreneurs, have coped well with these challenges and have emerged stronger from a difficult phase. While the banking sector has responded well so far, there are several challenges that lie ahead. Our banking system needs to equip itself to deal with emerging challenges and be prepared to cash in on the opportunities unleashed by higher growth. In dealing with the needs of small and medium enterprises, banks have to look for new delivery mechanisms.
Considering the specific needs of the micro finance sector, the existing External Commercial Borrowings (ECB) policy has been reviewed in consultation with the Government of India and it has been decided that Micro Finance Institutions (MFIs) may be permitted to raise ECB upto USD 10 million or equivalent during a financial year for permitted end-uses, under the Automatic Route.
Accordingly, banks/FIs should take steps to identify and assess their ML/TF risk for customers, countries and geographical areas as also for products/ services/ transactions/delivery channels, in addition to what has been prescribed in our Master Circular dated July 1, 2011, referred to in paragraph 2 above. Banks/FIs should have policies, controls and procedures, duly approved by their boards, in place to effectively manage and mitigate their risk adopting a risk-based approach as discussed above. As a corollary, banks would be required to adopt enhanced measures for products, services and customers with a medium or high risk rating.
A doubt has been expressed on the financial activities which promote dairy development in the districts. As credit under the dairy segment (including procurement, storage, processing, collection, transportation, etc.) primarily benefits small/marginal farmers and tiny units, it has been decided that bank credit to all activities which contribute to the development of dairy business would be treated as indirect finance to agriculture under priority sector. However, due care may be exercised by banks to ensure that the ultimate beneficiaries are farmers engaged in dairy farming, who will benefit from such investment.
With a view to providing greater flexibility to RRBs in mobilising non-resident deposits and also in view of the prevailing market conditions, it has been decided to deregulate interest rates on Non-Resident (External) Rupee (NRE) Deposits and Ordinary Non-Resident (NRO) Accounts (the interest rates on term deposits under Ordinary Non-Resident (NRO) Accounts are already deregulated). Accordingly, RRBs are free to determine their interest rates on both savings deposits and term deposits of maturity of one year and above under Non-Resident (External) Rupee (NRE) Deposit accounts and savings deposits under Ordinary Non-Resident (NRO) Accounts with immediate effect. However, interest rates offered by RRBs on NRE and NRO deposits cannot be higher than those offered by them on comparable domestic rupee deposits.
The Reserve Bank of India (RBI), has kept policy rates unchanged in its Mid Quarter Review of Monetary Policy announced today. The repo rate (the rate at which RBI lends money to banks) remains unchanged at 8.5%. The Reverse Repo Rate (rate at which RBI borrows money from banks) also will remain unchanged at 7.5% and the Marginal Standing Facility (MSF) rate at 9.5%.
