RBI/ 2004-05/292
RPCD.PLNFS.BC.No. 61 /06.02.31(WG)2004-05
December 08, 2004
The Chief Executive Officer
(All foreign banks operating in India)
Dear Sir,
Working Group on Flow of Credit
to SSI Sector - Interest Rates on Deposits with SIDBI in lieu of Shortfall in
Priority Sector Obligations
Please refer to our circular RPCD.Plan.BC.41/04.09.09/2003-04
dated November 03, 2003 regarding the interest rate on deposits placed with
SIDBI.
2. In this connection, a reference
is invited to the recommendation of the Ganguly Working Group in regard to evaluation
of methods of utilisation of deposits made by foreign banks with SIDBI for shortfall
in their priority sector obligation (Paragraph3). The recommendation has since
been accepted and accordingly, the structure of the current scheme is revised
with the following features.
i. The amount of shortfall
in priority sector obligation will be placed with SIDBI by foreign banks for
a tenor of three years.
ii. The funds placed with
SIDBI will have a graded interest rate structure linked to the Bank Rate as
indicated below:
|
Sr.No.
|
Shortfall in overall
target (32 per cent of net bank credit) or aggregate shortfall in
sub-targets SSI (10 per cent) and export credit (12 per cent), whichever
is higher.
|
Rate of interest on the entire
deposit to be made with SIDBI
(Per cent per annum)
|
|
1.
|
Less than 2 percentage
points
|
Bank Rate (6 per cent
at present)
|
|
2.
|
2 and above, but less
than 5 percentage points
|
Bank Rate minus
1 percentage point
|
|
3.
|
5 and above, but less
than 9 percentage points
|
Bank Rate minus
2 percentage points
|
|
4.
|
9 percentage points and
above
|
Bank Rate minus
3 percentage points
|
iii. SIDBI will pass on the
lower interest rates to the borrowers.
iv. The scheme would be made
effective from the financial year 2005-06 so that foreign banks have adequate
time to plan deployment of their resources.
3. Banks are requested to initiate
necessary action in this regard.
4. Please acknowledge receipt.
Yours faithfully,
(G. Srinivasan)
Chief General Manager.
|