RBI/2004/205 DBOD No. Dir.BC. 86 /13.07.05/2003-04
May 18, 2004
All Commercial Banks (excluding RRBs)
Dear Sir,
Bank financing of equities and investments in shares
Please refer to Circular DBOD
No. Dir. BC. 61/13.07.05/2003-04 dated January 3, 2004, in terms
of which margin on all advances against shares / financing of IPOs / issue of
guarantees was raised to 50 percent and a minimum cash margin of 25 per cent
(within the margin of 50 percent) was also required to be maintained in respect
of guarantees issued by banks.
2. On the recommendation
made by the Task Force constituted for monitoring developments in the financial
markets, it has been decided to reduce the above said margin requirement to
40% and the minimum cash margin to 20%.
3. The instructions issued
in this circular will come into effect immediately.
4. Please acknowledge receipt.
Yours faithfully,
(Prashant Saran)
Chief General Manager
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