It
has been decided to substitute, with immediate effect, the
existing Prudential Regulation No. VI by the following:
1.
No bank shall:
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Provide
unsecured credit of finance subscription towards floatation
of share capital of public limited companies.
-
Allow
financing facilities, whether fund based or non-fund
based, against the shares of companies not listed on
the Stock Exchange.
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Provide
loans and advances to any public limited company against
the security of its own shares. The existing lending
against such shares shall be regularized within 180
days of the date of issue of this Circular.
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Provide
financing against sponsor directors shares
(issued in their own name or in the name of their family
members) of private banks.
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Provide
financing to any one person (whether singly or together
with other family members of companies owned and controlled
by him or his family members) against shares (other
than sponsor shares) of any commercial bank in excess
of 5% of paid up capital.
-
Allow
financing facilities, whither fund based or non-fund
based, against the shares of companies which are not
in the Central Depository System.
2.
Facilities against he shares of listed companies shall be
subject to minimum margin of 50% of its average market value
of the preceding 12 months. The banks are however, free to
set higher margin requirements keeping in view other factors.
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Banks
shall continue to obtain prior clearance from the State
Bank for the purchase of shares of NBIs including Modaraba
and Leasing Companies.
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Each
bank shall furnish a statement on half yearly basis
showing finance provided by them against pledge of shares
latest by 20th January and 20th
July for each preceding half-year (as per enclosed format).
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The
above Regulations is enforced with immediate effect.
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Please
acknowledge receipt.
Encl:
As above.
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