Regulation and Supervision of Urban Cooperative Banks

Transcription

1 Regulation and Supervision of Urban Cooperative Banks Jyoti Kumar Pandey Deputy General Manager & MOF CAB, Pune College of Agricultural Banking, RBI, PUNE

2 Co-operative operative Credit Structure Rural credit institutions and urban cooperative banks PACs and UCBs at the base level State Co-operative Banks and DCCBs - higher financing agencies for UCBs also College of Agricultural Banking, RBI, PUNE

3 Characteristics of UCBs Registered under State Cooperative Societies Acts No controlling interest since the board of management is elected by share holders in a democratic manner One member one vote irrespective of number of shares held by a member Duality of command RCS / CRCS and RBI College of Agricultural Banking, RBI, PUNE

4 Characteristics of UCBs (Contd.) Borrowing restricted to members Restricted area of operation Share linking to borrowing No listing / no trading of shares Strong in helping financially weaker section College of Agricultural Banking, RBI, PUNE

5 Reasons why UCBs were brought under RBI s s control Demand for introduction of deposit insurance to cooperative banks Rapid growth of the cooperative banking sector necessitated better monitoring Effective from March 1,1966, provisions of B.R. Act (1949) were extended to UCBs This resulted in dual command, cooperation being a state subject

6 Progress of Urban Co-operative operative Bank PHASE I In formative stage, urban credit societies organised by communities PHASE II - Post 1966 PHASE III - Post Marathe Committee PHASE IV - Post Madhav Rao / Madhavpura Mercantile Cooperative Bank Crisis College of Agricultural Banking, RBI, PUNE

7 Progress of UCBs (Contd.) (Rs. in crores) No. of UCBs Deposits Advances

8 Progress of UCBs (Contd.) No. of UCBs Deposits Advances (Rs. in crores)

9 Regional Office Number of banks in Grade II, III and IV Number of banks in Grade II Number of banks in Grade III Number of banks in Grade IV 1 Guwahati 11 1 (4) 4 (4) 6 (4) 2 Thiruvanathapuram 48 9 (11) 31 (28) 8 (11) 3 Bhopal (28) 26 (17) 13 (14) 4 Kolkata 6 (11) (3) 6 (7) 5 Nagpur (45) 20 (43) 14 (33) 6 Hyderabad (43) 34 (18) 26 (15) 7 Bangalore (76) 97 (85) 12 (46) 8 Bhubaneshwar 11 5 (6) 6 (3) 0 (4) 9 Chandigarh 13 4 (1) 5 (1) 4 (4) 10 Ahmedabad (50) 85 (67) 52 (43) 11 Lucknow 30 8 (13) 14 (9) 8 (8) 12 Jaipur 9 2 (10) 5 (3) 2 (1) 13 Mumbai (128) 49 (84) 20 (71) 14 Chennai (32) 76 (39) 15 (7) 15 New Delhi 4 1 (1) 2 (1) 1 (2) 16 Jammu 1 1 () 0 (2) 0 () Total Figures in bracket are for 2006 College of Agricultural Banking, RBI, PUNE

10 Role of RBI Regulatory, Supervisory, Operational and Developmental Functions (Carried out through the Urban Banks Department) RBI derives authority to control and supervise the urban banks through the Banking Regulation Act, 1949 (As Applicable to Cooperative societies)

11 RBI s s Regulatory Functions Licence to commence banking business under Section 22 of B.R. Act, 1949 (AACS) Licence to open branches & extension counters Permission to deal in foreign exchange Issue of directions to maintain cash reserve and liquid assets Power to control advances (Section 21) Purposes for which advances are given, margins to be maintained

12 RBI s s Regulatory Functions Issue of prudential and operational guidelines Directions on maximum limit on advances, prescribe guidelines on individual / group exposure norms Issue of requisition to RCS for supersession of board of management of bank / liquidation of banks

13 RBI s s Regulatory Functions Interest rates on deposits and advances (Section 21) Issue of Direction (Section 35A) Imposition of penalty (Section 46) Cancellation / rejection of licence (Section 22(4)) Prescription towards CRR / SLR Grant of scheduled status

14 Supervisory Function On-site supervision Off-site returns Off-site surveillance College of Agricultural Banking, RBI, PUNE

15 RBI s s Developmental Functions Refinance to small scale industries sector through UCBs Identification of financially unsound banks and rehabilitation of such banks Training of urban bank personnel support given through RBI s training institutions College of Agricultural Banking, RBI, PUNE

16 Issues of Regulatory & Supervisory Concern : Sharp increase in no. of banks and branches Large number of financially unsound banks Steep increase in deposits consequent on deregulation High rate of interest on deposits, consequently on advances Adverse selection of borrowers Low capital base Dual/triple control Belated introduction of CRAR, ALM etc. High exposure to real estate and other sensitive sector

17 Issues of Regulatory & Supervisory Concern: Problems Faced By The Sector Lack of professionalism Political interference Unlicensed UCBs Low level of computerisation No Central recruitment Faulty recruitment system / excess staff / poor skill upgradation Low level of operational efficiency High operating cost College of Agricultural Banking, RBI, PUNE

18 Issues of Regulatory & Supervisory Concern: (Contd.) A. UCBs membership of Payment System Should it be unconditional? Experience of MMCB Access to call money SLR investments

19 B. Governance in UCBs Is it enough? How much is enough? Issues of Regulatory & Supervisory Concern: (Contd.) C. Growing ambit of operations of UCBs Should UCBs have unlimited access to inter-bank markets? Whether the reach should be nationwide? Access to capital markets?

20 D. Disclosure Standards Is it enough? How much is enough? E. Interest Rates on Advances Issues of Regulatory & Supervisory Concern: (Contd.) High interest rates as compared to the commercial banks Adverse selection of borrowers

21 Regulatory Issues concerning RBI Capital Adequacy UCBs unable to maintain capital HPC viewed CRAR to be made applicable to UCBs Issue pertaining to Deposit Insurance Some states do not have eligibility clause to be covered under DICGC Act, 1961 Insured banks often default payment of premium College of Agricultural Banking, RBI, PUNE

22 Regulatory Issues concerning RBI (Contd.) Supervision of UCBs Large number of banks On-site inspection in two years time frame System is under severe strain to maintain the schedule Need for off-site surveillance Other issues Financially unsound banks Unlicensed banks in Kerala Recent transactions by UCBs in Government Securities College of Agricultural Banking, RBI, PUNE

23 Road Map To Future Focus on: Consolidation : slow down in issue of new Licence Weeding out weak units Strengthening of regulatory and supervisory standards College of Agricultural Banking, RBI, PUNE

24 Policy Changes Standing Advisory Committee Guidelines issued to commercial banks by DBOD and DBS Recommendations of committees / working group Feed back / representations from NAFCUB / local Cooperative Banks Association / Unions Recommendations of JPC etc.

25 Committees Madhava Das Marathe Chitale Committee Madhava Rao Anant Geete Committee 2002 Joint Parliamentary Committee College of Agricultural Banking, RBI, PUNE

26 Recent Policy Changes Implementation of Madhava Rao committee recommendations Recent monetary policy measures after the failure of Madhavpura Mercantile Cooperative Bank Ltd., Ahmedabad Anant Geete Committee recommendations Recommendations of JPC Sardesai Committee recommendations Other measures

27 Rehabilitation Increased frequency of inspection for financially unsound banks SLRC meets to periodically review progress Discussions with CEOs/Chairmen Timeframe for improvement College of Agricultural Banking, RBI, PUNE

28 Application Of Prudential Norms Introduction of CRAR Why CRAR Introduced Belatedly? Various Constraints College of Agricultural Banking, RBI, PUNE

29 Introduction of CRAR DATE Scheduled UCBs Non-scheduled UCBS MARCH 31, % 6 % MARCH 31, % 7 % MARCH 31, 2004 MARCH 31, 2005 AS APPLICABLE TO COMMERCIAL BANKS As Applicable To Commercial Banks 9 % As Applicable To Commercial Banks

30 Introduction of CRAR (Contd.) CRAR now important parameter to know the financial soundness of UCBs Expansion etc. not allowed if CRAR not at stipulated level Large Increase in share capital not possible owing to Acts provisions UCBs to transfer 50% of profit if stipulated level not achieved.

31 Vishwanathan Working Group For augmenting capital of UCBs State Governments be requested to exempt the UCBs from the existing monetary ceiling on individual shareholding Provide instruments and avenues for raising stable and long term funds having equity or quasi equity characteristics College of Agricultural Banking, RBI, PUNE

32 Vishwanathan Working Group (Contd.) UCBs may be permitted to issue unsecured, subordinated (to the claims of depositors), nonconvertible, redeemable debentures / bonds, which can be subscribed to by those within their area of operations and outside (Tier II)

33 Vishwanathan Working Group (Contd.) UCBs may be allowed to issue special shares UCBs can also be allowed to issue these shares at a premium, which could be approved by the respective RCS, in consultation with Reserve Bank The special shares will be non-voting, perpetual and transferable by endorsement and delivery Commercial banks may be allowed to invest in these shares and Tier II bonds of UCBs College of Agricultural Banking, RBI, PUNE

34 Vishwanathan Working Group (Contd.) UCBs may be allowed to issue redeemable cumulative preference shares on specific terms and conditions with prior permission of RCS, in consultation with Reserve Bank UCBs may be permitted to raise deposits of over 15 year maturity and such deposits can be considered as Tier II capital subject to their meeting certain conditions such as They shall be subordinate to other deposits Ineligible for DICGC cover

35 Vishwanathan Working Group (Contd.) UCBs with negative networth may raise Tier II bonds such as bonds, preference share and long maturity deposits through conversion of existing deposits RBI may consider it as part of regulatory capital even though Tier I capital is negative College of Agricultural Banking, RBI, PUNE

36 Policy Measures after Madhavpura Mercantile Cooperative Bank Crisis 1. Prohibition of Deposits by UCBs With Other UCBs No inter UCB deposits Rationale against co-operative principles Tantamount to exposure in the UCBs Prevention of systemic risks

37 Operations in Call Money Market Call / notice money borrowing should not exceed 2 per cent of aggregate deposit as at the end of march of previous financial year. Complete freedom to lend Rationale To prevent asset liability mismatch Evening out temporary liquidity mismatches

38 Operations In Call Money Market (Contd.) Monitoring: UCBs should report the borrowing every next day to MPD and UBD Penalty for violation Fortnightly statement to Regional Office on lending and borrowing

39 Changes in SLR Composition Category Of UCBs Minimum SLR Holding In Government and other Approved Securities As Per Cent Of NDTL Earlier Now Applicable Non-scheduled UCBs UCBs With NDTL Of Rs. 25 Crore And Above 10.0 % 15.0 % UCBs With NDTL With Less Than Rs.25 Crore NIL 10.0 % Scheduled UCBs 15.0 % Entire SLR requirement

40 Changes in SLR Composition (Contd.) UBD Circular dated February 16, 2006 Non-scheduled primary (urban) co-operative banks having single branch-cum-head-office or having multiple branches within a single district having a deposit base of Rs.100 crore or less would be exempted from maintaining SLR in prescribed assets upto 15% of their DTL on keeping the required amount, in interest bearing deposits, with State Bank of India and its subsidiary banks and the public sector banks including Industrial Development Bank of India Ltd.

41 Monetary Policy Measures 2003 Ban On Loans to Directors etc. Prohibition on loans to directors, their relatives and concerns in which they are involved Ban to be effective from October 01, 2003 Fortnightly return prescribed to monitor Recommendations of Geete committee i.e. Enhanced limit of unsecured advances, implemented College of Agricultural Banking, RBI, PUNE

42 Ban on Loans to Directors (Contd.) UBD Circular dated October 06, 2005 Following categories of director related loans are out of the purview: regular employee-related loans to staff directors on the Board of UCBs normal loans as applicable to members to the directors on the Boards of salary earners co-operative banks and normal employee-related loans to Managing Directors of Multi- State co-operative banks College of Agricultural Banking, RBI, PUNE

43 1. UNSECURED ADVANCES Increased as recommended by the Committee For non-scheduled UCBs with DTL < than Rs.10 crore : Rs.50,000/- For non-scheduled UCBs with DTL > than Rs.10 crore : Rs.1.00 lakh For scheduled banks : Rs.2.00 lakh Only Gr. I banks can take advantage of this increase Anant Geete Committee Recommendations (2002)

44 Anant Geete Committee Recommendations (Contd.) Both gold loan and small loans upto Rs.1 lakh were exempted from the 90 days norms, and these loans will continue to be governed by the 180 days norm for recognition of loan impairment. UCBs permitted to open extension counters in residential colonies. The condition to have at least five hundred beneficiaries accounts for extension counters was withdrawn Non-scheduled UCBs were allowed to place their surplus funds with strong scheduled UCBs, subject to certain conditions

45 Anant Geete Committee Recommendations (Contd.) 2. PLACEMENT OF DEPOSITS WITH OTHER UCBs Scheduled UCBs permitted to accept deposits from other UCBs Requirement of deposit accepting banks: Three consecutive A audit ratings Compliance with RBI requirements No inter scheduled UCB deposits Done away with

46 JPC Recommendations 1. Strengthening of Audit: Concurrent audit made mandatory for all UCBs Audit committee of board as stated in earlier circulars, should exist in each of the banks Audit committee to monitor for all audit functions as also compliance with RBI inspection reports, RBI guidelines etc.

47 JPC Recommendations (Contd.) 2. COMPLIANCE TO RBI REPORT: Compliance to be furnished within 6 weeks All defects pointed out in inspection report to be removed within 4 months Certificate to be effect submitted to RBI within 4 months False certificate or delayed compliance to attract penal action Strict penalty for non compliance of RBI directives

48 Other JPC Recommendations Dual control should go Inspection report should comment on the quality of audit report Improvement of on-site / off-site supervision Prohibition of loans & Advances to Directors and their relatives and concerns in which they are interested College of Agricultural Banking, RBI, PUNE

49 Sardesai Committee ON-SITE INSPECTION- NEW THRUST Classification of banks Existing frequency Revised frequency Scheduled banks Once in a year Once in a year Grade I Once in three years Once in two years Grade II NA Once in 18 months Grade III Once in a year Once in a year Grade IV Once in a year Once in a year

50 Sardesai Committee (Contd.) Inspection New Approach: Each UCB to be inspected at least once in two years Focused supervision of UCBs with deposits more than Rs.100 crore ROs to be fully responsible for follow up Periodic interaction of ROs with State Authorities College of Agricultural Banking, RBI, PUNE

51 Sardesai Committee (Contd.) Inspection New Approach Upgradation of skills of Inspecting Officers Staff requirements of UBD being finalised Three ROs with huge backlog to initiate revised measures College of Agricultural Banking, RBI, PUNE

52 Shifting focus - Inspection Traditional Approach Balance Sheet Approach Impressionistic CAMELS Analytical Approach Based on certain fixed parameters Prone to prejudices of the IO Objective? IO may miss certain key areas Conclusions based on performance in certain key areas

53 Identification Of Financially Unsound Banks And Future Set Up Focus: On Early Identification By Objective Parameters Nomenclature changed banks not to be classified as weak / sick The banks to be classified into four Grades depending upon their financial status Four grades depending upon NPA level, CRAR, Regulatory compliance Profitability

54 Dual Control of UCBs Managerial aspects viz. Registration Constitution of management Administration and recruitment Amalgamation and liquidation Statutory audit / appointment of auditors are with State Governments College of Agricultural Banking, RBI, PUNE

55 Dual Control of UCBs (contd.) RBI does not have any powers to: - -Appoint or remove the members of the board of management of urban banks -Initiate amalgamation of two urban banks -Appoint auditors of urban banks Matters related to banking operations are governed by directives and guidelines issued by the RBI

56 Dual Control on UCBs (Contd.) Issues: Shifting to Central Subject Concurrent List Demarcation of Areas of managerial related and banking related functions

57 Separate Supervisory Authority Duality / multiplicity of control slackens regulatory control Apex Single body to regulate and supervise Comprising officials from State Government, Central Government, Reserve Bank of India, Cooperative banks, independent experts etc. College of Agricultural Banking, RBI, PUNE

58 Separate Supervisory Authority(Contd.) RBI RESPONSE : After separate supervisory body. The urban co-operative banks should not accept / demand deposits (chequable deposits). They should not resort to non collateralised borrowings and they should not have access to call money market, and Government of India may consider evolving a suitable mechanism to safeguard the interests of depositors of urban co-operative banks.

59 Amendment to B. R. Act, 1949 Management related functions, like, Elections, Conduct of Directors, etc., to be with RCS. Banking related functions to be with RBI Audit function, including statutory audit to be with RBI College of Agricultural Banking, RBI, PUNE

60 Amendment to B. R. Act, 1949 (Contd.) Section 56 of B. R. Act, 1949 to be deleted Make all provisions of the parent Act applicable Section 10B and 10BB requiring RBI approval for appointment of full time Chairman / MD Section 10C would enable non-member as Chairman Serving MPs / MLAs / MLCs as also stockbrokers banned from being a director of the bank College of Agricultural Banking, RBI, PUNE

61 Disclosure Norms Applicable to UCBs with deposits of Rs.100 crore & more CRAR, investments, advances against real estate/shares, interest of directors, profitability etc. To be declared. College of Agricultural Banking, RBI, PUNE

62 Specific Issues Developments Relating to Apex Cooperative Bank of Maharashtra and Goa Licence Cancelled As Directed By The Supreme Court The Court Holds That The RBI Can Not Give Banking Licence to Societies Registered Under Multi State Act Directions Issued to the Bank College of Agricultural Banking, RBI, PUNE

63 Revised Licensing Policy for New Urban Banks Focus: Arrest Mushrooming Growth in UCBs Strong start up capital 4 categories Emphasis on professionalism Concept of unit banks Relaxation for special categories to continue Screening committee to process proposals

64 Revised Licensing Policy: Screening Committee Comprised of four eminent experts of impeccable credentials from the fields of banking, finance and co-operation Need and potential, Viability of the proposal / institution Since September 2001 up to date, the Committee considered 216 proposals 'in principle' approval for 9 proposals 205 proposals rejected (2 under correspondence) (Licenses granted in : 114, : 28)

65 Annual Policy Statement Revised Licensing Policy: Present Stance To consider issuance of fresh licences only after a comprehensive policy on UCBs, including an appropriate legal and regulatory framework for the sector, is put in place and a policy for improving the financial health of the urban co-operative banking sector is formulated early

66 Revised Licensing Policy: Present Stance UCBs, other than those in Grade III and IV, registered in states which have signed MoU and those registered under Multi-State Cooperative Societies Act, 2002 will be eligible to convert the extension counters on completion of three years of their operation into full-fledged branches proposal is for shifting/relocation of the converted branch within the city/town limit Banking services to the existing customers of the extension counter, including the institutional customer, are ensured No new extension counter will be allowed in the institution in which the extension counter is housed presently

67 Unlicensed UCBs WHAT IS AN UNLICENSED BANK? REQUIEMENT FOR LICENSING: (Present Policy) Compliance for entry point norms Compliance with CRAR Net NPA less than 10%, and Profit for preceding 3 years Final decision for existing unlicensed March 31, 2003 Directions of BFS College of Agricultural Banking, RBI, PUNE

68 Annual Policy Statement: To consider issue of licences to new proposals only after a comprehensive policy is in place, including appropriate legal regulatory framework To consider only such schemes of reconstruction which envisages recapitalisation by stakeholders College of Agricultural Banking, RBI, PUNE

69 Mid Term Review of Annual Policy Statement: Vision Document Standing Advisory Committee comprising of DG (RBI), Govt. representatives, Select State Govt. representatives,federation, IBA, DICGC, NABARD would meet on quarterly basis

70 Vision Document Need for State specific approach State Level Task Force on Coop Urban Banks (TAFCUB) comprising of RD, RCS, Central Office and in-charges of UBD ROs and a representative each from NAFCUB and state federations MOU signed with the State of Gujarat, Andhra Pradesh, Karnataka and Madhya Pradesh TAFCUB would identify the potentially viable urban cooperative banks and draw up a time bound action plan for revival of UCBs by setting specific monitorable milestones

71 Vision Document (Contd.) Terms of Reference Categorise UCBs in the state under two tiers of regulatory regime Identify banks, which are viable, potentially viable and unviable To recommend various conditions, including the nature and extent of funds required to be infused, in each UCB identified as potentially viable the sources of fund changes in management where necessary and the time frame for achieving viability In doing so, the TAFCUB may assign responsibility to different agencies for facilitating the turn-around To set up milestones for evaluation of progress made under the rehabilitation plan

72 Vision Document (Contd.) To recommend the future set up of the existing unlicenced banks whose applications are pending with Reserve Bank of India To recommend the manner and time frame for exit of the un-viable banks either by merger / amalgamation conversion into a credit society and liquidation The proposals for merger / amalgamation recommended by the TAFCUB shall conform to the guidelines issued in this regard To arrive at a threshold limit of deposits that would make a depositor automatically eligible to become a member To recommend on the management aspects of a bank which is placed under the revival plan Any other issues as may be referred to it by the Reserve Bank of India

73 Vision Document (Contd.) Proposed Operating Framework Unit Banks (Deposits Less than Rs. 50 crore) Simplified regulatory regime CRAR could be replaced by NOF to NDTL ratio Exposure to sensitive sector restricted Lower prescribed limit for investment in G-Sec Restrictions to insulate them from systemic shocks Restricted geographical operations Such banks to roll back operations in far off locations College of Agricultural Banking, RBI, PUNE

74 Vision Document (Contd.) Proposed Operating Framework All other Banks Regulatory prescriptions as applicable to commercial banks Extant relaxations may continue up to the period specified There should be no concept of unscheduled multi state bank CRCS may ensure that a bank is scheduled before it is granted license under MCS Act Existing scheduled banks both under MCS Act and State Cooperative Societies who do not comply with prudential and regulatory regime akin to that of commercial banks could be excluded from second schedule of RBI Act College of Agricultural Banking, RBI, PUNE

75 Vision Document (Contd.) Supervision Increased dependence on off-site surveillance of RBI and onsite supervision of RCS in respect of small unit banks would provide RBI with increased flexibility to deploy resources to larger and risky banks Developmental Role RBI may help particularly small UCBs in helping their skills CAB could provide subsidised training RDs of RBI may facilitate with PDs enabling UCBs to buy sell G-Sec easily College of Agricultural Banking, RBI, PUNE

76 Two Tier Framework Smaller UCBs whose operations are limited to a single district and have deposits of less than Rs.100 crore Allowed to adopt 180-day delinquency norm for classification of assets as non-performing Smaller UCBs given exemption from maintaining SLR in Government securities (up to 15 per cent of NDTL) to the extent of funds placed in interest bearing deposits with the public sector banks Not subject to the provisioning norms of 0.40 per cent of Standard Advances which is applicable to the larger UCBs Simplified reporting system consisting of five returns has been introduced for the smaller banks having deposits between Rs.50 crore and Rs.100 crore and whose branches are limited to a single district

77 New Business Opportunities Insurance All scheduled UCBs having a minimum net worth of Rs.50 crore were permitted to undertake insurance business as corporate agents. All other UCBs could undertake insurance business on a referral basis, without any risk participation, through their network of branches (January 24, 2005) UCBs registered in States that have entered into MoUs with the Reserve Bank or registered under the Multi State Co-operative Societies Act, 2002 to undertake insurance agency business as corporate agents without risk participation, subject to compliance with the following eligibility norms: Minimum networth of Rs 10 crore Should not have been classified as Grade III or IV bank. In case of UCBs registered in States which have not signed MoUs with the Reserve Bank existing norms shall continue

78 New Norms (Contd.) Tier-I banks The 180 day loan delinquency norm for NPAs extended by one more year i.e. up to March 31, 2008 The 12-month period for classification of a substandard asset in doubtful category will be effective from April 1, 2008 Further these banks would be required to provide 100% on the secured portion of D-III advances classified as doubtful more than three years on or after April 1, 2010 For the outstanding stock of D-III advances as on March 31, 2010, banks will be required to provide as under: 50% as on March 31, % as on March 31, % as on March 31, % as on March 31, 2013 Tier-II banks 100% provisioning for advances classified as D-III (doubtful more than three years) will apply to those classified as such on or after April 1, 2007 instead of those so classified on or after April 1, 2006 Consequently, for the outstanding stock of D-III assets as on March 31, 2007, banks would be required to provide as under: 50% upto March 31, % as on March 31, % as on March 31, % as on March 31, 2010

79 New Norms (Contd.) Statutory minimum CRR requirement of 3 per cent of total demand and time liabilities no longer exists with effect from the said notified date (April 25, 2007) Know Your Customer (KYC) Norms / Anti-Money Laundering (AML) Standards / Combating of Financing of Terrorism (CFT) All cross-border wire transfers must be accompanied by accurate and meaningful originator information Cross-border wire transfers must contain the name and address of the originator and where an account exists, the number of that account Information accompanying all domestic wire transfers of Rs /- and above must include complete originator information i.e. name, address and account number etc., unless full originator information can be made available to the beneficiary bank by other means. If a bank has reason to believe that a customer is intentionally structuring wire transfers to below Rs /- to several beneficiaries in order to avoid reporting or monitoring, the bank must insist on complete customer identification before effecting the transfer Interbank transfers and settlements where both the originator and beneficiary are banks or financial institutions would be exempted from the above requirements

80 New Norms (Contd.) Provisioning for Standard Assets (February 19, 2007) Direct advances to agricultural and SME sectors 0.25 % Personal loans, Loans and advances qualifying as capital market exposures, Commercial real estate loans and loans and advances to systemically important NBFCs-ND % All other loans and advances not included in above % UCBs to extend individual housing loan up to the limit of Rs lakh per beneficiary of a dwelling unit However, housing finance to borrowers availing loans above Rs lakh will not be treated as priority sector lending

81 Thank You