|
Inter-branch Accounts - Provisioning for Net Debit Balance
DBOD
No. BP.BC. 73 - 21.04.018 dated 26th February 2003
Please
refer to our circular DBOD No. BP.BC. 22/ 21.04.018/ 99 dated March 24, 1999
wherein banks were advised that from the year ended March 31, 1999, they should
make 100 percent provision for the net debit position in their Inter-branch
Accounts, arising out of the un-reconciled entries (both debit and credit)
outstanding for more than three years as on March 31 every year. To expedite the
process of reconciliation, the period allowed for making provision against the
net debit balance in the inter-branch accounts was brought down from three years
to two years from the year ended March 31, 2001 vide our circular DBOD No. BP.BC.
133/21.04.018/2000 dated January 10, 2000 and further to one year from the year
ended March 31, 2002 vide our circular DBOD No. BP.BC.17/21.04.018/201-02 dated
August 24, 2001. While reviewing the progress made by banks in a recent meeting
the Board for Financial Supervision noted that a large number of banks were able
to reconcile the entries in time and hence the banking system in general needed
to be complimented. It was also decided that the guidelines for making
provisions should be revised.
2.
In this connection, banks' attention is invited to paragraph 3 of our
circular DBOD No. Fol. BC.114/16.01.001-93 dated April 28, 1993, in terms of
which banks are required to reconcile the entries outstanding in their inter
branch accounts within a period of six months. With this end in view and in
keeping with the best banking practices, it has been decided to further reduce
the time period allowed to banks for making provision against the net debit
balance in the inter-branch account from one year to six months from the year
ending March 31, 2004.
3.
Accordingly, banks should arrive at the category-wise position of
unreconciled entries outstanding in the inter-branch accounts for more than six
months as on March 31, 2004 and make provision equivalent to 100 percent of the
aggregate net debit under all categories. While doing so, it may be ensured
that:
(i)
The credit balance in the Blocked Account created in terms of our
instructions contained in our circular DBOD No. BP.BC.73/21.04.018/98 dated July
27, 1998 is also taken into account; and
(ii)
The net debit in one category is not set-off against net credit in
another category.
4.
Please acknowledge receipt.
|