RBI/2004-05/495
RPCD.CO.RRB.No.BC.105/03.05.34/2004-05
June 17, 2005
All Regional Rural Banks
Dear Sir,
Strengthening of Prudential Norms
- State Government guaranteed exposures
Please refer to our circular RPCD.RRB.No.BC.54/03.05.34/99-2000
dated January 14, 2000, which contained, among others, prudential norms regarding
State Government guaranteed advances. At present, asset classification and provisioning
requirements in respect of State Government guaranteed exposures are linked
to invocation of the State Government guarantee.
2. The prudential norms pertaining
to State Government guaranteed exposures, (i.e. advances and investments) have
been reviewed and it has been decided to delink the requirement of invocation
of State Government guarantee for asset classification and provisioning and
subject them to the same norms as applicable to exposures not guaranteed by
the State Governments.
3. However, with a view to enabling
banks to have a smooth transition in the matter, the revised prudential norms
in respect of State Government guaranteed exposures (i.e. both advances and
investments) would be implemented in a phased manner as under:
a. With effect from the year ending
March 31, 2006, State Government guaranteed advance and investment
in State Government guaranteed securities would attract asset classification
and provisioning norms, if interest and/or principal or any other amount due
to the bank remains overdue for more than 180 days.
b. With effect from the year ending
March 31, 2007, State Government guaranteed advance and investment
in State Government guaranteed securities would attract asset classification
and provisioning norms, if interest and/or instalment of principal or any other
amount due to the bank remains overdue for more than 90 days.
4. Please acknowledge receipt to
our concerned Regional Office.
Yours faithfully,
(G. Srinivasan)
Chief General Manager
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