Page 54 - Banking Finance May 2020

RBI CIRCULAR

3. Accordingly, to ensure that farmers do not have to pay on the deposits shall not be recognised as income
penal interest and at the same time continue getting by the UCBs.
the benefits of interest subvention scheme, ii) If the UCBs choose to convert such deposits into
Government has decided to continue the availability of
long term perpetual debt instruments (e.g.
2% IS and 3% PRI to farmers for the extended period Innovative Perpetual Debt Instrument - IPDI) which
of repayment upto 31.05.2020 or date of repayment, may be recognised as capital instrument under a
whichever is earlier, for short term crop loans upto ?3
scheme of restructuring/ revival of a UCB under
lakh per farmer which have become due between AID, provision on the portion of deposits converted
March 01, 2020 and May 31, 2020. into such instruments shall not be required.
4. Banks are therefore advised to extend the benefit of 3. The above instructions will come into force with
IS of 2% and PRI of 3% for short term crop loans upto
immediate effect.
?3 lakh to farmers whose accounts have become due
or shall become due between March 1, 2020 and May (Neeraj Nigam)
31, 2020.
Chief General Manager
5. All other terms and conditions remained unchanged.
Prudential Norms on Income
(Sonali Sen Gupta)
Chief General Manager Recognition, Asset Classification and
Provisioning Pertaining to Advances -
Provisioning on interbank exposure of
Projects under Implementation
Primary (Urban) Co-operative Banks
RBI/2019-20/216
(UCBs) under All Inclusive Directions
April 17, 2020
RBI/2019-20/222
April 20, 2020 1. Please refer to paragraph 25 of Master Direction – Non-
Banking Financial Company – Systemically Important
1. As you are aware, the imposition of All-inclusive Non-Deposit taking Company and Deposit taking
Directions (AID) on an Urban Co-operative Bank (UCB), Company (Reserve Bank) Directions, 2016; and
inter alia, restricts the bank from discharging its paragraph 25 of Master Direction – Non-Banking
liabilities except as permitted by RBI. This impacts the Financial Company – Non-Systemically Important Non-
withdrawal of interbank deposits placed by other UCBs Deposit taking Company (Reserve Bank) Directions,
with such bank as also timely discharge of interbank
2016 on ‘Norms for restructuring of advances’. The
exposures such as discounted bills drawn under Letter
Reserve Bank has issued guidelines to banks on
of Credit (LC) issued by the UCB under AID.
deferment of date of commencement of commercial
2. In order to ensure that such exposures are objectively operations (DCCO) for projects in commercial real estate
recognised in the financial statements of UCBs and also (CRE) sector vide circular number DOR.No.BP.BC.33/
with a view to addressing the systemic impact of 21.04.048/2019-20, dated February 07, 2020.
provisioning requirements on such exposures, it has
2. In this connection, it has been decided to extend the
been decided as under:
above-mentioned guidelines issued to banks, mutatis
i) The interbank exposures arising from deposits
mutandis, to NBFCs as well.
placed by UCBs with a UCB under AID and their
non-performing exposures arising from discounted 3. The Master Directions are being modified accordingly.
bills drawn under LCs issued by a UCB under AID
shall be fully provided within five years at the rate (Manoranjan Mishra)
of 20% annually. Further, the interest receivable Chief General Manager

54 | 2020 | MAY | BANKING FINANCE