RBI/2006-2007/292
RPCD.CO.RF.BC.No.57/07.40.06/2006-07 March
23, 2007 The
Chief Executive Officers of
All State / Central Co-operative Banks (StCBs/DCCBs) Dear
Sir/Madam, Grant
of Loans for acquisition of Kisan Vikas Patras (KVPs) We
have recently come across certain instances where banks had sanctioned loans to
individuals for acquisition of Kisan Vikas Patras (KVPs). The individuals
were first required to bring in 10% of the total face value of the proposed investment
in the KVPs as margin and the remaining 90% of the investment was treated as loan
and funded by the bank for acquisition of the KVPs. Once the KVPs were acquired
in the borrower’s name, the same were pledged thereafter to the bank. 2.
The sanction of loans as described above is not in conformity with the objectives
of small savings schemes. As banks may be aware, the basic objective of
small savings schemes is to provide a secure avenue of savings for small savers
and promote savings, as well as to inculcate the habit of thrift among the people. The
grant of loans for acquiring/investing in KVPs does not promote fresh savings
and, rather, channelises the existing savings in the form of bank deposits to
small savings instruments and thereby defeats the very purpose of such schemes.
Banks may, therefore, ensure that no loans are sanctioned for acquisition of/investing
in Small Savings Instruments including Kisan Vikas Patras. 3.
Please acknowledge receipt to our Regional Office concerned. Yours
faithfully, (C.S.Murthy)
Chief General Manager-in-Charge |