The Presidents/Chief Executives,
Alll Banks/ DFIs

Dear Sirs/Madam,

PRUDENTIAL REGULATIONS

Please refer to Prudential Regulations issued vide BPD Circular No 35 of 2003.

2. The following clarifications/amendments may be noted in respect of the above regulations.

A. AMMENDMENT/ADDITION IN PRUDENTIAL REGULATIONS FOR CORPORATE AND COMMERCIAL BANKING AND SME FINANCING

• Definition of “Secured” under Part-A (Definitions) at serial No 23 & 19 of PRs for Corporate and Commercial Banking and SME Financing respectively.

The following two Paras may be added with the definition of “Secured”:

ii) The banks may also take exposure against Trust Receipt. They are, however, free to take collateral/securities, to secure their risks/exposure, in addition to the Trust Receipt.
iii) Banks/DFIs will be free to decide about obtaining security/collaterals against the L/C facilities for the interim period, i.e. from the date of opening of L/C till the receipt of title documents to the goods.”

B. CLARIFICATION IN PRUDENTIAL REGULATIONS FOR CONSUMER FINANCING

• General Reserve Requirement (Regulation R-4)
General Reserves at the prescribed rate, as mentioned in regulation R-4, will be maintained for the performing portion only of Consumer Portfolio, instead of for the whole consumer portfolio.

3. Other instructions on the subject will remain unchanged.

4. Please acknowledge receipt