Please
refer to BSD Circular No. 2 of 2009 and Prudential Regulation
R-8 for Corporate and Commercial Banking, Prudential
Regulation R-11 for Small and Medium Enterprises Financing
and Prudential Regulation R-22 for Consumer Financing.
2. In this regard, it has been decided as under:
I. Forced Sale Value:
Allow benefit of 40% of FSV of pledged stock and mortgaged
residential, commercial & industrial properties
(land and building only) held as collateral against
NPLs for three years from the date of classification
for calculating provisioning requirement w.e.f. 30-09-2009.
Accordingly, the following Prudential Regulations
stand amended and are attached herewith:
a. R-8 (para 4) and Annexure IV and V of Prudential
Regulations for Corporate and Commercial Banking;
b. R-11 (para 4) and Annexure III and IV of the Prudential
Regulations for SME Financing; and
c. Regulation R-22 of the PRs for Consumer Financing
(Housing Finance).
II. Instruction on Rescheduling/Restructuring
of Classified Loans and Advances:
i) Introduce interim instructions on classification/provisioning
requirements in respect of rescheduling/restructuring
of such classified loans and advances that are overdue
by less than one year at the time of rescheduling/restructuring.
These instructions will be applicable till June 30,
2010, and afterwards prevailing instructions on the
subject will be applicable. The interim instructions
are attached herewith.
ii) Banks/DFIs shall continue to follow the instructions
contained in para 3 of the Prudential Regulations
R-8 for Corporate and Commercial Banking and Prudential
Regulations R-11 for SME Financing in respect of such
loans and advances which are not covered in these
interim instructions or which subsequently fail to
meet the provisions of these instructions.
3. Banks/DFIs may apply the interim instructions on
classification/provisioning requirements only on such
of their existing classified loans and advances, which
were rescheduled/restructured on or after 1st January
2009 and were overdue by less than one year at the time
of rescheduling/restructuring.
4. Banks/DFIs may avail the benefit of provisioning,
arising from above instructions, subject to the condition
that it shall not be available for the payment of cash
or stock dividend. Further, the details and impact of
the benefit in provisioning shall be adequately disclosed
in the notes to the financial statements.
5. Banks/DFIs shall provide details of loans and advances
rescheduled/restructured under the interim instructions
on monthly basis within 10 days of the end of each month,
starting from the month of October 2009, to Banking
Surveillance Department as per the attached format.
6. All other instructions on the subject shall however,
remain unchanged.
Please acknowledge receipt.
(Enclosures:
As above)