Priority Sector Targets & Classification
DIRECT LENDING TO MOST DISADVANTAGED FARMERS, THE SMALL and marginal farmers, has been around 6% of ANBC. To increase direct lending to agriculture, the target for direct lending to these farmers under the recently revised Priority Sector Norms was increased to 7% for 2015-16 and to 8% for 2016-17. Furthermore, a variety of corporate loans have been precluded from getting direct lending status. Banks have been directed by RBI (16.07.15) to ensure that their overall direct lending to non-corporate farmers does not fall below the system-wide average of the last 3 years achievement ( to be notified by RBI at the beginning of each year), failing which they will attract the usual penalties for shortfall. Banks should reach the level of 13.5% direct lending to the beneficiaries who earlier constituted the direct agriculture sector.
NPA Norms pertaining to Credit Card Accounts
In order to bring in greater credit discipline and provide operational flexibility to credit card issuers, RBI decided (16.07.15), that the ‘past due’ status of a credit card account for the purpose of asset classification would be reckoned from the payment due date mentioned in the monthly credit card statement. Hence, a credit card account will be treated as NPA if the minimum amount due, mentioned in the statement, is not paid fully within 90 days from the payment due date. However, banks shall report a credit card account as ‘past due’ to credit information companies or levy late payment charges, only when a credit card account remains ‘past due’ for more than 3 days. The number of ‘days past due’ and late payment charges shall be computed from the payment due date mentioned in the credit card statement.
Kisan Vikas Patra, 2014 and Sukanya Samriddhi Account
RBI decided (02.07.15) to pay agency commission to authorised banks for handling the work relating to the above schemes as per the extant rates advised by RBI in circular dated May 22, 2012 i.e. physical receipts Rs.50 per transaction, e-mode receipt Rs.12 per transaction and payments 5.5 paise per Rs.100 turnover. Further, Government has desired to have a bank-wise and region-wise weekly progress report on implementation of Sukanya Samriddhi Account. Accordingly, the agency banks are to furnish region-wise weekly progress report indicating the number of Sukanya Samriddhi Accounts opened to Budget Division, Department of Economic Affairs with a copy to Joint Director, National Saving Institute, Nagpur.
Opening of Current Accounts by Banks – Need for Discipline
As per extant guidelines (15.05.20 04) banks are to ensure that their branches do not open current accounts of entities which enjoy credit facilities (fund based or non-fund based) from the banking system without specifically obtaining a No-Objection Certificate (NOC) from the lending bank(s). Accounts can be opened if no response is received from the existing bankers after a minimum waiting period of a fortnight.
Banks have been advised by RBI (02.07.15) to verify from the data available in CRILC database whether the customer is availing of credit facility from another bank. Banks may also seek ‘No Objection Certificate’ from the drawee bank where the initial deposit to current account is made by way of a cheque.
Foreign Investment in India by Foreign Portfolio Investors
As per extant RBI guidelines, all investments by an Foreign Portfolio Investors (FPI) within the limit for investment in corporate bonds shall be required to be made in corporate bonds with a min residual maturity of 3 years.
RBI clarified (16.07.15) that the restriction on investments with less than 3 years residual maturity shall not be applicable to investment by FPIs in Security Receipts (SRs) issued by ARCs. But investment in SRs shall be within the overall limit prescribed for corporate debt from time to time.
Deposits placed with NABARD/SIDBI/NHB for meeting shortfall in Priority Sector Lending by Banks
As per extant instructions, the banks can hold among others, RIDF/SIDBI/RHDF deposits under Held to Maturity (HTM) category. Further, the deposits placed with SIDBI/NABARD in lieu of shortfall in lending to priority sector should be shown under Schedule 8 “Investments” of the balance sheet at Item (vi)-Others.
RBI decided (16.07.15) that for accounting periods commencing on or after April 1, 2015, deposits placed with NABARD/SIDBI/NHB on a/c of shortfall in priority sector targets should be included under Schedule 11- ‘Other Assets’ under subhead ‘Others’ of the Balance Sheet. Banks should disclose the details of such deposits, both for the current and previous year, as a footnote in Schedule 11 of the Balance Sheet. While presenting the balance sheet for the year ending March 31, 2016, the previous year amounts may be appropriately regrouped.
The extant instructions on the treatment of such amounts for the purposes of computation of Capital to Risk Weighted Assets Ratio (CRAR), Adjusted Net Bank Credit (ANBC), etc. remain unchanged.
Data Format for Information to Credit Information Companies
As per RBI circular dated 27.06.14, a Uniform Credit Reporting Format for the purpose of reporting credit information to the Credit Information Companies (CICs), was set out. This format has two parts, Consumer Bureau and Commercial Bureau.
RBI decided (09.07.15) to create a new status value viz; ‘Restructured due to Natural Calamity’ for the fields ‘Written Off and Settled Status” in the Consumer Bureau and ‘Major reasons for restructuring’ in the Commercial Bureau. It will enable banks/FIs to report to CICs, restructured/rescheduled agricultural loans on account of any declared natural calamities. Such reporting would help banks to know if any earlier loans availed by the farmers were restructured due to natural calamities.
Banks/FIs/CICs have been advised make necessary modification to their systems and commence reporting the above information w.e.f. September 30, 2015.
Export factoring on non-recourse basisAs per extant RBI guidelines, AD Category–I banks can provide ‘export factoring’ services to exporters on ‘with recourse’ basis by entering into arrangements with overseas institutions without prior RBI approval. On recommendation of Technical Committee on Facilities to the Exporters (Chairman: Shri G. Padmanabhan), RBI allowed AD banks (16.07.15) to factor the export receivables on a non-recourse basis, subject to conditions as under:
a)Banks should ensure that the client is not over financed and may determine the working capital requirement taking into account the value of the invoices purchased for factoring representing genuine trade invoices.
b) If export financing has not been done by Export Factor, it may pass on the net value to the financing bank/ Institution after realising the export proceeds.
c) AD bank, being the Export Factor, should have an arrangement with the Import Factor for credit evaluation & collection of payment.
d)Notation should be made on the invoice that importer has to make payment to the Import Factor.
e)After factoring, the Export Factor may close the export bills and report the same in the Export Data Processing and Monitoring System (EDPMS) of RBI.
f)In case of single factor, not involving Import Factor overseas, the Export Factor may obtain credit evaluation details from the correspondent bank abroad.