Page 54 - Banking Finance July 2022

RBI CIRCULAR

2. On a review of implementation of the e-mandate their Boards, a comprehensive report on the status of
framework and the protection available to customers, compliance with the instructions within three months
it has been decided to increase the aforesaid AFA limit from the date of this circular.
from Rs. 5,000/- to Rs. 15,000/- per transaction.
(Manoranjan Mishra)
3. This circular is issued under Section 10 (2) read with
Chief General Manager
Section 18 of the Payment and Settlement Systems Act,
2007 (Act 51 of 2007), and shall come into effect Discontinuation of Return under Foreign
immediately.
Exchange Management Act, 1999
(P. Vasudevan)
RBI/2022-23/69
Chief General Manager
June 9, 2022
Bank finance to Government owned
1. Attention of Authorised Persons is invited to A.P. (DIR
entities series) circular No 26, dated February 18, 2022,
wherein Authorised Persons were advised about
RBI/2022-23/71
proposed discontinuation of the return “Details of
June 14, 2022 guarantee availed and invoked from non-resident
entities”. It was also advised that the date of
1. Please refer to the Master Circulars DBR.No.Dir.BC.10/
discontinuation would be notified in due course.
13.03.00/2015-16 dated July 1, 2015 on ‘Loans and
2. In this regard, reference may be drawn to A.P. (DIR
Advances – Statutory and Other Restrictions’ and
series) circular No 20, dated August 29, 2012, Master
DOR.CRE.REC.No.06/08.12.001/2022-23 dated April 1,
Direction - External Commercial Borrowings, Trade
2022 on ‘Housing Finance’.
Credits and Structured Obligations dated March 26,
2. We have come across instances where banks have not
2019 and the Master Direction - Reporting under
been strictly complying with our extant instructions on
Foreign Exchange Management Act, 1999 dated
assessment of commercial viability, ascertainment of
January 01, 2016, as amended from time to time (Refer
revenue streams for debt servicing obligations and
Part X – ‘Statement for reporting of non-resident
monitoring of end use of funds in respect of their financing
guarantees issued and invoked in respect of fund and
of infrastructure/ housing projects of government owned
non-fund based facilities between two persons resident
entities.
in India’).
3. Banks/ FIs have also been found to have violated our
3. It has now been decided to discontinue the above
instructions which inter alia require that in case of
return, with effect from the quarter ending June 2022.
projects undertaken by government owned entities,
4. The above-mentioned Master Directions are being
term loans should be sanctioned only for corporate
updated to reflect these changes. AD banks may bring
bodies; due diligence should be carried out on viability
the contents of this circular to the notice of their
and bankability of the projects to ensure that revenue
constituents.
stream from the project is sufficient to take care of the
debt servicing obligations; and that the repayment/ 5. The directions contained in this circular have been
servicing of debt is not from budgetary resources. issued under Section 10(4) and 11(2) of the Foreign
Exchange Management Act, 1999 (42 of 1999) and are
4. Attention of the banks is especially drawn towards the
without prejudice to permissions/approvals, if any,
specific instructions contained in the paragraphs referred
required under any other law.
to in the Annex. It is reiterated that banks are required
to follow these instructions in letter and spirit.
(Ajay Kumar Misra)
5. Banks are advised to carry out a review and place before Chief General Manager-in-Charge

54 | 2022 | JULY | BANKING FINANCE