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Reliance on Call
MPD.
No. 226 - 07.01.279 - dated 11th December 2002
Please
refer to MPD circular no. 217/07.01.279/2001-02 dated June 27, 2002 wherein
prudential limits on the exposure of commercial banks in call/ notice money
market were stipulated in two stages. The first stage of prudential limits on
the exposure of commercial banks in call/notice money market has commenced from
October 5, 2002.
2.
It was proposed to convene a meeting of the representatives of select
banks in the second half of November 2002 to review money market developments.
Accordingly, a meeting with select banks was held on November 30, 2002 wherein a
consensus emerged that the banks would be able to make a smooth transition to
the second stage of prudential limits, scheduled to commence from the fortnight
beginning December 14, 2002.
3.
The second stage of stipulation of prudential limits on the exposure of
commercial banks in call/ notice money market would commence from December 14,
2002. Accordingly:
�In the second stage, with effect
from the fortnight beginning December 14, 2002, lending of scheduled commercial
banks, on a fortnightly average basis, should not exceed 25 percent of their
owned funds; however, banks are allowed to lend a maximum of 50 per cent on any
day, during a fortnight. Similarly, borrowings by scheduled commercial banks
should not exceed 100 percent of their owned funds or 2 per cent of aggregate
deposits, whichever is higher; however, banks are allowed to borrow a maximum of
125 per cent of their owned funds on any day, during a fortnight.�
4.
To facilitate monitoring of your operations in call/ notice money market
on a daily basis, you are requested to continue to submit the daily return in
time to the Adviser-in-Charge, MPD, RBI as per the extant practice.
Kindly
acknowledge receipt.
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