Please refer to Para 1 & 2 of Prudential Regulation R-5 of Prudential Regulations for Corporate / Commercial Banking.

2) On the representation of some banks as well as the trade and industry associations, it has been decided to amend the above referred Regulation to facilitate the borrowers as under:

i) Where the equity of a borrower is negative and the borrower has injected fresh equity during its current accounting year, it will be eligible to obtain finance upto 4 times of the fresh injected equity (instead of the existing 3 times) till 30th June, 2008. After expiry of this period the existing version of the regulation will stand restored.

ii) Banks / DFIs may relax the current ratio upto 0.65:1 instead of the existing (0.75:1) if they are satisfied that appropriate risk mitigants have been put in place or the ratio has been adversely impacted due to the nature of the business of the borrower. This relaxation will be available till 30th June, 2008 and the existing version of this regulation will stand restored after the expiry of this period.

3) All other instructions on the subject remain unchanged.

4) Please acknowledge the receipt.