RBI/2010-11/ 561
DBOD.BP.BC.No.99 /21.04.132/2010-11
June 10, 2011
The Chairman and Managing Directors/
Chief Executive Officers of
All Scheduled Commercial Banks
(excluding RRBs & LABs)
Dear Sir,
Prudential Guidelines on Restructuring of Advances by Banks
Please refer to paragraph 3.4.2(v) of our
circular DBOD.BP.BC.No.37/21.04.132/
2008-09 dated August 27, 2008 on ‘Prudential Guidelines on Restructuring of
Advances by Banks’, wherein banks were advised that if due to lack of expertise
/ appropriate infrastructure, they find it difficult to ensure computation of
diminution in the fair value of advances extended by their small / rural
branches, they will have the option of notionally computing the amount of
diminution in the fair value and providing therefor at five percent of the total
exposure in respect of all restructured accounts where the total dues are less
than rupees one crore till the financial year ending March 2011. It was also
advised that the position would be reviewed thereafter.
- On a review, it has been decided that the above alternative option of
computing diminution in the fair value of advances extended by small and rural
branches on restructuring will remain applicable for another two years, i.e.
till the financial year ending March 31, 2013. The position would be reviewed
thereafter.
Yours faithfully,
(M.P.Baliga)
General Manager