| Date: |
14-11-2002
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| Notification No: |
RBI Notification No 225/2002
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| Issuing Authority: |
RBI
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| Type: |
Notification
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| File No: |
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| Subject: |
Reliance on Call/ Notice Money Market: Prudential Norm
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Reliance on Call/ Notice Money Market: Prudential Norm
MPD.
BC. 225 - 07.01.279 - dated 14th November 2002
Please
refer to Circular No. MPD.217/ 07.01.279/ 2001-02 dated June 27, 2002 on the
captioned subject.
2. It was indicated therein that the prudential
limit stipulated on the exposure of scheduled commercial banks to call/ notice
money market, benchmarked to owned funds or aggregate deposits, whichever is
higher, will become effective in two stages; the first stage being effective
from October 5, 2002.
3. Some representations have been received
regarding the treatment of Reciprocal Line Facilities in call/ notice money
transactions. Under Reciprocal Line
Facility, a foreign bank in India enters into a standing agreement with an
Indian bank having branches abroad to draw specified amount of rupee resources
from the latter in India against the equivalent amount of foreign currency
sanctioned to the Indian bank by the former abroad.
4. In this context, in order to provide greater
flexibility in liquidity management by banks, it is clarified that rupee
resources drawn under Reciprocal Line Facility by a foreign bank in India is
initially exempted for one year from the prudential limits specified for call/
notice money transactions. The
position will be reviewed after one year.
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