Monday, November 30, 2015

Investment by Foreign Portfolio Investors in Corporate Bonds

 It has now been decided to permit FPI to acquire NCDs/bonds, which are under default. The revised maturity period of such restructured NCDs/bonds, should be three years or more.

The FPI, which proposes to acquire such bonds should disclose to the Debenture Trustees the terms of their offer to the existing debenture holders / beneficial owners from whom they are acquiring. Such investment should be within the overall limit prescribed for corporate debt from time to time.

Based on RBI Circular dt  26/11/15. Please visit www.rbi.org.in for any further clarification if required…..   Poppy



Advance Remittance for Import of aircrafts /helicopters / other aviation related purchases

While allowing advance remittance by AD 1 banks, without Bank Guarantee or unconditional irrevocable Standby Letter of Credit up to USD 50 million, the approval of Ministry of Civil Aviation will no longer be required.


Based on RBI Circular dt 26/11/15. Please visit www.rbi.org.in for any further clarification if required…..   Poppy








Import of Goods into India – Evidence of Import

An importer has to submit as evidence of import,
 (a) the exchange control copy of the Bill of Entry for home consumption;
(b) the exchange control copy of the Bill of Entry for warehousing, in the    case of 100% Export Oriented Units (EOUs); or
(c) Customs Assessment Certificate or Postal Appraisal Form as declared by the importer to the Customs Authorities.

RBI has allowed the following additions to the above list:
 (d) Bill of Entry issued by Customs Authorities named as Ex-Bond Bill of Entry or by any other similar nomenclature.
(e) Courier Bill of Entry, as declared by the courier companies to the Customs Authorities.

Based on RBI Circular dt 26/11/15. Please visit www.rbi.org.in for any further clarification if required…..   Poppy

Thursday, November 26, 2015

Bank Finance to Factoring Companies

Banks can now extend finance to support the Factoring Companies complying with the following criteria among others.
1. They derive at least 50% of their income from factoring activities.
2. The receivables, irrespective of whether on 'with recourse' or 'without recourse' basis, form at least 50%of the assets of the factoring company.

Based on RBI Circular dt 01/07/15. Please visit www.rbi.org.in for any further clarification if required…..   Poppy








Expatriate Officers in Indian Offices of Foreign Banks

Foreign Banks can now deploy a maximum of four expatriate officers for each branch and a maximum of six expatriates for their Head Office Functions.

Based on RBI Circular dt 26/11/15. Please visit www.rbi.org.in for any further clarification if required…..   Poppy










Tuesday, November 24, 2015

Sovereign Gold Bonds, 2015-16

The issue date of Sovereign Gold Bonds 2015-16 has shifted from 26th Nov'15 to 30th Nov '15 and therefore the applicants will now be paid interest at savings bank rate from the date of realisation of payment till the date of issue that is 30th Nov '15.

Based on RBI Circular dt 24/11/15. Please visit www.rbi.org.in for any further clarification if required…..   Poppy





Thursday, November 19, 2015

Priority Sector Lending – Targets and Classification

It was suggested that a system-wide average of the last three years acheivement regarding overall lending to non-corporate farmers will be notified at the beginning of each year.
It has now been decided that the average figure for FY 2015-16 would be 11.57%. Foreign Banks with more than 20 branches will be guided by their approved action plan.


Based on RBI Circular dt 18/07/15. Please visit www.rbi.org.in for any further clarification if required…..   Poppy


Factoring Services in Banks

It was earlier suggested that that the pre-payment amount offered by banks for the receivables acquired under factoring should not exceed 80% of the invoice value.

it is now advised that banks may decide the percentage based on their own assessment of the credit worthiness of the assignor/ buyer, due diligence carried out by them and other commercial considerations.

Based on RBI Circular dt 19/11/15. Please visit www.rbi.org.in for any further clarification if required…..   Poppy

Monday, November 16, 2015

Acquisition and Transfer of Immovable Property in India by NRIs/PIOs/Foreign Nationals

Acquisition and Transfer of Immovable Property in India

A. Non- Resident Indian (NRI)

(i) Purchase of immovable property: Any immovable property (other than agricultural land/ plantation property / farm house) in India.

(ii) Transfer of immovable property: A NRI may transfer any immovable property in India to a person resident in India. He may also transfer his property (other than agricultural land or plantation property or farm house) to an Indian Citizen resident outside India or a PIO resident outside India.

(iii) Payment for Acquisition of Immovable Property: May be made out of Funds received through normal banking channels from abroad or by debit to his NRE / FCNR (B) / NRO account only.

(iv)         Documents: If purchased under general permission an NRI is not required to file any documents with the Reserve Bank.

B. Person of Indian Origin (PIO)

(i) Purchase of immovable property: Any immovable property (other than agricultural land/ plantation property / farm house) in India.

(ii) Gift/ Inheritance of immovable property:
(a)  By way of gift from a person resident in India or a NRI or a PIO.

(b)By way of inheritance from resident indian or a person resident outside India who had acquired such property as per FEMA regulations.

(iii) Transfer of immovable property: By way of sale to a person resident in India. He may, however gift or sell his agricultural land / farm house / plantation in India, to an India citizen  resident in India. He may also gift his residential or commercial property in India to a person resident in India or outside India, who is a citizen of India or to a PIO resident outside India.

(iv) Payment for Acquisition of Immovable Property in India:
a.   Out of funds received only by inward remittance through normal banking channels or by debit to his NRE / FCNR (B) / NRO account.

(v)  Documents: If purchased under general permission a PIO is not required to file any documents with the Reserve Bank.

Acquisition by Foreign Embassies/ Diplomats/ Consulate Generals

Foreign Embassy/ Diplomat/ Consulate General, may purchase/ sell immovable property (other than agricultural land/ plantation property/ farm house) in India provided –

i. Clearance from the Government of India, Ministry of External Affairs is obtained, and
ii. The consideration is paid out of funds remitted from abroad through the normal banking channels.

Acquisition by person resident outside India for carrying on a permitted activity

A person resident outside India who has established a Branch, Office or other place of business, other than a Liaison Office, for carrying on any activity in India, may –

a.   acquire any immovable property in India, which is necessary for or incidental to carrying on such activity and the person files with the RBI a declaration in the form IPI, not later than 90 days from the date of such acquisition; and

b.   Mortgage such property to an Authorised Dealer as a security for any borrowing.

Repatriation of sale proceeds of immovable property

(A) Immovable property acquired by way of purchase

(a)   A person or his successor shall not, except with the prior permission of the Reserve Bank, repatriate the sale proceeds of any immovable property.

(b) In the event of sale of immovable property other than agricultural land / farm house / plantation property in India by an Indian citizen resident outside India or a person of Indian origin, the Authorised Dealer may allow repatriation of the sale proceeds, provided:

(i)     the immovable property was acquired as per FEMA guidelines;
(ii)   amount to be repatriated does not exceed the amount paid for acquisition of the property in foreign exchange (Inward remittance, FCNR a/c or NRE a/c).
(iii) in case of residential property, the repatriation is restricted to two properties only.

(B) Immovable property acquired by way of inheritance/ legacy/ out of Rupee funds

A NRI / PIO may remit an amount, up to US $ 1,000,000 per financial year out of the balances held in NRO accounts or sale proceeds of assets by way of purchase / acquired by inheritance / legacy / out of Rupee funds. Remittances exceeding this limit require prior permission of the Reserve Bank.

In cases of the deed of settlement made by either of his parents or a close relative and the settlement taking effect on the death of the settler, the original deed of settlement should be produced for the remittance. All remittances will be subject to payment of applicable taxes in India.

Where the remittance as above is made in more than one instalment, the remittance shall be made through the same Authorised Dealer.

Refund of purchase consideration

Refund, made by the house building agencies on account of non-allotment, together with interest, if any may be allowed by the Authorised Dealers by credit to NRE/FCNR (B) account of the beneficiary, provided the original payment was made out of NRE / FCNR (B) account or inward remittance through normal banking channels.

Prohibition on acquisition or transfer of immovable property in India by citizens of certain countries

Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau or Hong Kong cannot, without prior permission of the Reserve Bank, acquire or transfer immovable property in India, other than lease, not exceeding five years.

Purchase of Immovable Property in India by a Foreign National of Non-Indian Origin resident outside India

i. Such persons are not permitted to acquire any immovable property in India unless by way of inheritance from a person resident in India. However, they can acquire or transfer immovable property in India, on lease, not exceeding five years without the prior permission of the Reserve Bank.

ii. Foreign Nationals of non-Indian origin, other than a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau or Hong Kong can acquire immovable property in India on becoming resident provided he satisfies the condition of the period of stay.

iii. Foreign nationals of non-Indian origin who have acquired immovable property in India by any such way mentioned above cannot transfer such property without the prior permission of the RBI.

Payment of taxes Any transaction involving acquisition of immovable property under these regulations shall be subject to applicable tax laws in India.

Based on RBI Circular dt 01/07/15. Please visit www.rbi.org.in for any further clarification if required…..       Poppy


Saturday, November 14, 2015

Credit Facilities to SCs & STs

Flow of Credit to SCs / STs

Planning Process

(a)  At the block level, weightage is to be given to scheduled castes / scheduled tribes in the planning process. Special bankable schemes suited to these communities should be drawn up. Banks should consider loan proposals with utmost sympathy and understanding.
(b)    The District Level Consultative Committees should be the principal mechanism of co-ordination between banks and development agencies.
(c)     The district credit plans should indicate the linkage of credit with employment and development schemes.
(d)    Banks will establish closer liaison with the District Industries Centres.
(f)      Banks should review their lending procedures and policies to see that loans are sanctioned in time, are adequate and production-oriented and that they generate incremental income to make them self-liquidating.
(g)     While 'adopting' villages for intensive lending, villages with sizeable population of these communities may be specially chosen.
(h)    Special efforts should be made to evolve suitable bankable schemes for weaker sections including members of these communities.

Role of Banks

(i)          Bank staff may help the poor borrowers in filling up the forms and completing other formalities.
(j)          Awareness among the beneficiaries about various schemes will have to be created by contacting such borrowers and explaining to them the salient features of the schemes as also the advantages that will accrue. Banks should organize meetings with SC / ST beneficiaries to understand their credit needs and to incorporate the same in the credit plan.
(k)      Bank should keep Application Register / Deposit Register, Complaint Register in desired order and maintain relevant documents and pass book in local language too, besides in Hindi and English.
(l)    Circulars issued by RBI / NABARD should be circulated among the staff.
(m)     Banks should not insist on deposits while considering such loan applications. Non release of subsidy upfront amounts to under-financing and hampers asset creation / income generation hence should be avoided.
(n)       The National Scheduled Tribes Finance & Development Corporation and National Scheduled Castes Finance & Development Corporation have been set up under the administrative control of Ministry of Tribal Affairs and Ministry of Social Justice & Empowerment, respectively.
(o)       Advances sanctioned to State sponsored organizations of SC / ST, for the specific purpose of purchase and supply of inputs to and / or the marketing of outputs of the beneficiaries viz. artisans, village and cottage industries of these organizations, should be treated as Priority Sector Advances.

Role of SC / ST Development Corporations
(p) SC/ST Development Corporations can consider bankable schemes / proposals for bank finance. As regards Collateral Security and / or third party guarantee for loans, guidelines issued to banks on priority sector lending will apply.

Rejection of Applications
(q) If applications in respect of SCs / STs are to be rejected, it should be done at the next higher level. Further, reasons for rejection should be clearly indicated.

Centrally Sponsored Schemes
There are several major centrally sponsored schemes under which credit is provided and subsidy is received. Under each of these, there is a significant reservation / relaxation for the members of the SC / ST communities.

Reservations for SC / ST Beneficiaries under Major Centrally Sponsored Schemes

National Rural Livelihoods Mission
(r) NRLM would ensure adequate coverage of vulnerable sections of the society such that 50% of these beneficiaries are SC/STs.

National Urban Livelihoods Mission
(s) Under NULM, advances should be extended to SCs / STs to the extent of their strength in the local population.

Differential Rate of Interest Scheme
(t) Banks have been advised to grant to eligible borrowers belonging to SCs / STs such advances to the extent of not less than 2/5th (40 percent) of total DRI advances.

Scheme for Rehabilitation of Manual Scavenger
(u) Government of India stopped funding the NSLRS since 2005-06 and approved the Self Employment Scheme for Rehabilitation of Manual Scavengers (SRMS).

Relaxations/ Reservations for SC/ST beneficiaries under major centrally sponsored schemes
(v) Under the DRI scheme, the eligibility criteria that size of land holding should not exceed 1 acre of irrigated land and 2.5 acres of unirrigated land is not applicable to SCs / STs. Moreover, members of SCs / STs satisfying the income criteria of the scheme can also avail of housing loan up to Rs.20,000/- per beneficiary over and above the individual loan of Rs.15,000/- available under the scheme.

Monitoring and Review

A special cell should be set up at the Head Office for monitoring the flow of credit to SC / ST beneficiaries.

Convenor bank (of SLBC) should invite the representative of National Commission for SCs / STs, representatives from National Scheduled Castes and Scheduled Tribes Finance and Development Corporation (NSFDC) and State Scheduled Castes and Scheduled Tribes Finance and Development Corporation (SCDC) to attend SLBC meetings

A periodical review should be made by the Head Office of banks of the credit extended to SCs / STs.

The Board of Directors should review on quarterly basis, the measures taken to enhance the flow of credit to SC / ST borrowers. The review should also consider the progress made in lending to these communities directly or through through related agencies. A copy each of such review notes should be sent to Reserve Bank.

Reporting Requirements

It has been considered necessary to have data of banks' advances for SCs and STs under priority sectors and Differential Rates of Interest (DRI) Scheme separately. Accordingly banks may submit half-yearly reports to RBI showing credit extended to SCs and STs under priority sectors and an yearly report showing credit extended to SCs and STs under DRI Scheme.


Based on RBI Circular dt 01/07/15. Please visit www.rbi.org.in for any further clarification if required….. Poppy

Lead Bank Scheme

Introduction

The Lead Bank Scheme was introduced by RBI in December 1969. The Scheme aims at coordinating the activities of banks and other development agencies. For coordinating the activities in the district, a particular bank is assigned the lead bank’s responsibility of the district. The Scheme was last reviewed in 2009. Lead banks were advised to ensure that private sector banks are more closely involved in the implementation of the Lead Bank Scheme.

Fora under Lead Bank Scheme

Block Level Bankers’ Committee (BLBC)

BLBC coordinates between credit institutions and field level development agencies. It prepares and reviews the implementation of Block Credit Plan, and also resolves operational problems. LDM is the Chairman of BLBC. All the banks operating in the block, BDO, technical officers, industries and co-operatives are members of the Committee. BLBC meetings are held quarterly. The LDO of RBI and the DDM of NABARD attend the meetings. The representatives of Panchayat Samitis are also invited to attend the meetings at half yearly intervals.

District Consultative Committee (DCC)

Constitution of DCC

DCCs were constituted for coordinating various activities under the Lead Bank Scheme. The District Collector is the Chairman. RBI, NABARD, all the banks in the district,  various State Government departments and allied agencies are the members of the DCC. The Lead District Officer (LDO) represents the Reserve Bank as a member of the DCC. The LDM convenes the DCC meetings. The Director of MSME-Development Institutes is an invitee in districts where MSME clusters are located.

Conduct of DCC Meetings

i) DCC meetings should be convened at quarterly intervals.
ii)    Sub-committees may be set up to work on specific issues and submit reports to the DCC for its consideration.
iii)  DCC should give feedback to the SLBC on issues that needs to be discussed on a wider platform.

Agenda for DCC Meetings
1
A Monitoring mechanism to periodically assess and evaluate the progress
made to provide banking services. Prepare district wise Financial Inclusion Plan (FIP) for the three year period. The progress under FIP should be reviewed for quarterly submission to SLBC.
2
Specific issues inhibiting IT enabled financial inclusion and enabling it.
3
Facilitate 'enablers' and remove impeders of banking development.
4
Monitoring initiatives on Financial Literacy Centres (FLCs) and RSETI type Training Institutes for providing skills and capacity building to manage businesses.
5
Scaling up financial literacy efforts.
6
Review of performance under District Credit Plan (DCP)
7
Flow of credit to priority sector and weaker sections of the society
8
Assistance under Government sponsored schemes
9
Grant of educational loans
10
Progress under SHG - bank linkage
11
SME financing & bottlenecks thereof, if any
12
Timely submission of data by banks
13
Review of relief measures

The above list is not exhaustive. The lead banks may include any other agenda item considered necessary.

Role of LDMs

The office of LDM should be sufficiently strengthened. Officers of appropriate level and attitude should be posted as LDMs. Apart from the usual role, the new functions envisaged for LDMs include the following:

i)       Drawing up and monitoring the road map for banking penetration
ii)    Monitoring implementation of district credit plan
iii)  Associate with the setting up of Financial Literacy Centres (FLCs) and RSETIs by banks
iv)  Associate with organizing financial literacy camps by FLCs and rural branches of banks.
v)    Holding annual sensitisation workshops for banks and Government officials with participation by NGOs/Panchayati Raj Institutions (PRIs)
vi)  Arranging for quarterly awareness and feedback public meetings, grievance redressal, etc.


Quarterly Public Meeting and Grievance Redressal

The LDM should convene a quarterly public meeting in coordination with the LDO of Reserve Bank, banks and other stakeholders to generate awareness, obtain feedback from the public and provide grievance redressal or facilitate approaching the appropriate machinery for such redressal.

District Level Review Committee (DLRC) Meetings

DLRC meetings are chaired by the District Collector and attended by members of the DCC. Local MPs/MLAs/ Zilla Parishad Chiefs are also invited to these meetings. The DLRC meetings should be convened at least once in a quarter. Review of the programmes under Lead Bank Scheme is carried out in the meetings. Responses to queries need to be attended to promptly. The follow up of DLRC’s decisions is to be discussed in the DCC meetings.

DCC/DLRC meetings- Annual Calendar of Meetings

Lead banks have been advised to prepare an annual schedule of DCC and DLRC meetings for all districts in consultation with the Chairperson of the meetings, lead district officer of RBI and Public Representatives in case of DLRC and circulate to all members.

State Level Bankers’ Committee (SLBC)

Constitution of SLBC

i) SLBC is chaired by the CMD/ED of the Convenor bank. It comprises representatives of commercial banks, RRBs, State Cooperative Banks, RBI, NABARD, heads of Government departments and representatives of financial institutions operating in the State. Representatives of various organizations like retail traders, exporters and farmers’ union etc. are special invitees in SLBC meetings. SLBC meetings would be convened by the Convenor bank.

ii) Illustrative guidelines on the conduct of SLBC meetings have been issued.

Conduct of SLBC Meetings

i) The SLBC meetings are to be held at quarterly intervals. It is chaired by the CMD/ED of the Convenor bank and co-chaired by Additional Chief Secretary or Development Commissioner. High Level of participation ensure an effective and desired outcome.

ii)    The Chief Minister/Finance Minister and senior level officers of the State/RBI (of the rank of Deputy Governor / Executive Director) may be invited. Chief Ministers are encouraged to attend at least one SLBC meeting in a year.

iii)Steering Sub Committee/Sub-Committees for specific tasks like agriculture, micro, small/medium industries/enterprises, handloom finance, export promotion and financial inclusion etc may be constituted. Such committees are expected to meet more frequently than the SLBC.

iv) The secretariat of SLBC should be sufficiently strengthened.

v)  The various fora at lower levels may give feedback to the SLBC on issues that need to be discussed on a wider platform.

vi) SLBCs may invite academicians and researchers as 'special invitees' to attend SLBC meetings occasionally both for adding value to the discussion and also associate them for product formulation. Other 'special invitees' may be invited to attend SLBC meetings depending on the agenda items/issues.

vii) Bank's linkage with NGOs/Corporate houses to ensure that the NGOs/corporates provide the necessary 'credit plus' services.

Agenda for SLBC Meetings

i.       Financial inclusion - monitoring mechanism to assess and evaluate the progress made to provide banking services. Compile and consolidate Financial inclusion Plan for the three year period. The progress under FIP should be reviewed quarterly and submitted to Reserve Bank.
ii.     The specific issues inhibiting  IT enabled financial inclusion and enabling it.
iii.  Issues to facilitate 'enablers' and remove 'impeders' of banking development.
iv     Monitoring initiatives for providing 'Credit Plus' activities by banks and setting up of Financial Literacy Centres (FLCs) and RSETI type training institutes for providing skills and capacity building to manage businesses
v.     Scaling up financial literacy efforts to achieve financial inclusion.
vi.Review of performance of banks under Annual Credit Plan (ACP)
vii.                        Regional imbalances in deployment of credit to various sectors of the economy
viii.                     Credit - Deposit Ratio of the State
ix.Flow of credit to priority sectors and weaker sections of the society
x. Assistance under Government sponsored schemes
xi. Grant of educational loans
xii.                        Progress under SHG - bank linkage
xiii. Discuss the problems faced by MSME sector
xiv.                     Steps taken for improving land record and recovery mechanism
xv.Timely submission of data by banks
xvi.                     Review of relief measures  
xvii.                   Issues remaining unresolved at the DCC/DLRC meetings

The above list is not exhaustive. The Convenor may include any other agenda item considered necessary.

Banking Penetration

i)          SLBC Convenor banks / lead banks are advised to focus attention on achieving 100% financial inclusion. In addition to to the conventional brick and mortar branches, such banking services can be provided through any of the various forms of ICT-based models, including through BCs.

ii)        SLBC Convenor should take up with the State Governments issues of road/digital connectivity, conducive law and order situation, uninterrupted power supply and adequate security etc. for ensuring banking expansion.

SLBC - Yearly Calendar of Meetings

i) Convenor banks are advised to prepare a yearly calendar of programme in the beginning of the year itself. The calendar should clearly specify the cut off dates for data submission and acceptance thereof by SLBC Convenor. The agenda should also be circulated in advance. Following broad guidelines should be used for preparation of the calendar of programmes:
Activity
To be completed by
Preparation   of   calendar   of   SLBC/UTLBC meetings and intimation to all the concerned of the  cut-off  dates  for  submission  of  data and dates  of  meetings  as  per  the  dateline  given below.
5th  January every year
Reminder regarding the exact date of meeting and submission of data by banks to SLBC
15 days before end of the quarter
Dead  line  for  receipt  of  information/data  by SLBC Convenor bank
15 days before end of the quarter
Distribution of agenda cum background papers
20 days from the end of the quarter
Holding of the meeting
Within 45 days from the end of the quarter
Forwarding  the  minutes  of  the  meeting  to  all stakeholders
Within 10 days from holding the meeting
Follow-up of the action points emerged from the meeting
To be completed within 30 days of forwarding the minutes (for review in the next meeting)

ii)SLBC Convenor banks have been advised to give wide publicity to the annual calendar at the beginning of the year and ensure that dates of senior functionaries expected to attend the meetings are blocked for all meetings by their offices. In case the senior functionary is not able to attend the meeting, the meeting should be held as planned in the calendar.

SLBC Website – Standardisation of information /data

Convenor banks are to maintain the SLBC websites where all instructions pertaining to Lead Bank Scheme and Government Sponsored Schemes are made available to the common man. In order to standardize the information and data on SLBC website, an indicative list of the information & data is given in the Annex II of the master circular. The list is only indicative and SLBCs are free to put any additional information.

Liaison with State Government

Convenor banks are expected to co-ordinate the activities of all banks in the State, discuss with the State Government officials the operational problems in lending, extending necessary support for banking development and to achieve the objective of financial inclusion.

Capacity Building/Training/Sensitization Programmes

i) In each State, a full day sensitisation workshop may be convened by the SLBC Convenor in April/May every year. Such sensitisation should form part of the probationary training of such officers. Further, as soon as they are posted in a district, the SLBC may arrange for exposure visits for the District Collectors to the SLBC Convenor’s office for sensitisation and understanding of the Lead Bank Scheme.

ii) Staff of banks and government agencies are to be aware of the latest developments and emerging opportunities. There is need for staff sensitisation/ training/seminars, etc. at periodic intervals on an ongoing basis


Implementation of Lead Bank Scheme

Preparation of credit plans
Under LBS, planning starts with identifying block/activity wise potential estimated for various sectors.

Potential Linked Credit Plans (PLPs)
i)    PLPs take into account the long term physical potential, availability of infrastructure support, marketing facilities, and policies/programmes of Government etc.

ii) A pre-PLP meeting is convened by LDM during June every year to be attended by banks, Government agencies, etc. They reflect their views and concerns and deliberate on major financial and socio-economic developments in the district in the last one year and priorities to be set out for inclusion in the PLP. DDM of NABARD will make a presentation in this meeting outlining the major requirements of information for preparing the PLP for the following year. The preparation of PLP for the next year is to be completed by August every year to enable the State Government to factor in the PLP projections.

iii)              The procedure for preparing the District Credit Plan is as follows:
a)     Controlling Offices of banks and DCCB/LDB will circulate the block/activity-wise potential to all their branches for preparing the Branch Credit Plans (BCP).

b)    A special BLBC meeting will be convened where the Branch Credit Plans will be discussed and aggregated to form the Block Credit Plan. DDM and LDM will ensure that the Plan is in tune with the identified potentials.

c)     All the Block Credit Plans will be aggregated by LDM to form a District Credit Plan. The Zonal/Controlling Offices of banks should take into account the commitments made in the DCP.

d)    The District Credit Plan will be placed before the DCC for final acceptance/approval. All the District Credit Plans would be aggregated into a State Level Credit Plan to be prepared by SLBC Convenor bank and launched by 1st of April every year.

Monitoring the performance of credit plans

At Block Level
Block Level Bankers’ Committee (BLBC)
At District Level
District Consultative Committee (DCC) & District Level Review Committee (DLRC)
At State Level
State Level Bankers’ Committee (SLBC)

Monitoring of LBS by RBI - Monitoring Information System (MIS)

i)     Annual Credit Plans are prepared with the sub sectors Agriculture & allied activities, Micro and Small Enterprises, Education, Housing and others under priority sector and Medium Industries, Large industries, Education, Housing and others in the non-priority sectors.

ii)     In order to maintain consistency and integrity of data, the ACP and FIP data needs to be grouped separately for scheduled commercial banks and other banks while presenting in the DCC/SLBC meetings and submitting to regional offices. The data of scheduled commercial banks needs to be further grouped into public sector banks, private sector banks and Regional Rural Banks.

Assignment of Lead Bank Responsibility

i)  Lead Bank Scheme is administered by the RBI since 1969. As on June 30, 2015, 25 public sector banks and one private sector bank have been assigned lead bank responsibility in 673 districts of the country.

ii)      As on June 30, 2015, the SLBC/UTLBC convenorship of 29 States and 7 Union Territories has been assigned to 16 public sector banks and one private sector bank.

iii) The Lead Bank Scheme (LBS) was extended to 16 districts of metropolitan areas of Chennai (1), Delhi (11), Hyderabad (1), Kolkata (1) and Mumbai (2) during 2013-14 bringing the entire country under the fold of the Lead Bank Scheme.

Roadmap for opening of banking outlets in unbanked villages

i)       In November 2009, under Phase-I, guidelines for providing banking services in villages with population more than 2000 was issued. Under Phase II, the roadmap for villages with less than 2,000 population has been rolled out in June 2012

ii)  SLBC convenor banks have been advised to monitor the progress of Phase II. Keeping in view the ongoing implementation of PMJDY, SLBC Convenors and lead banks have been advised to complete the process of providing banking services under Phase II by August 14, 2015.

Credit Deposit Ratio

CD ratio of banks in Rural and Semi-Urban Areas
Banks have been advised to achieve a credit deposit ratio of 60% in respect of their rural and semi-urban branches separately on an all-India basis. Banks should ensure that wide disparity in the ratios between different States / Regions is avoided.

Implementation of the recommendations of Expert Group on CD Ratio
i) As per the recommendations of the expert group, the CD ratio of banks should be monitored at different levels on the basis of the following parameters –
Institution / Level
Indicator
Individual banks at Head Office
Cu + RIDF
State Level (SLBC)
Cu + RIDF
District Level
Cs
Where:


Cu = Credit as per place of Utilization
Cs = Credit as per place of Sanction
RIDF = Total Resource support provided to States under RIDF
Further, banks are advised that:

·     In the districts having CD ratio less than 40, Special Sub-Committees (SSCs) of DCC may be set up to monitor the CD ratio.

·     Districts having CD ratio between 40 and 60, will be monitored under the existing system by DCC, and

·     The district with CD ratio of less than 20 need to be treated on a special footing.

ii)  The LDM is designated as the Convenor of the SSC which will comprise of District co-ordinators of banks, LDO of RBI, DDM of NABARD, District Planning Officer or a representative of the Collector duly empowered to take decisions on behalf of the district administration.

The functions of the Special Sub-Committees are as under:

·     The SSCs will draw up Monitorable Action Plans (MAPs) for improving the CD ratio in their districts.

·     SSC will hold a special meeting immediately after its constitution and, set for itself a target for increasing the CD ratio initially for the current year. It will also set a definite time frame.

·     On the completion of this process, the target and time frame will be placed before the DCC for approval.

·     Take up the plans for implementation and monitor the same assiduously once in two months.

·     Report the progress to the DCC quarterly and through them to the Convenor of SLBC.

·     Consolidated report will be prepared and tabled at the SLBC meetings for discussion / information.

iii)   Areas, where the CD ratio less than 20, are generally located in hilly, desert, inaccessible terrains and / or those dependent solely on the primary sector and/ or characterized by a breakdown of the law and order machinery. In such areas, conventional methods are not likely to work unless the banking system and the State Government come together in a specially meaningful way.

iv) While the framework for implementation for raising the CD ratio in these districts will be the same as in the case of districts with CD ratio below 40, the focus and level of efforts should be of a much higher scale.
For this,
·     All such districts should first be placed in a special category.
·     The responsibility for increasing CD ratio should be taken by banks and State Governments and the districts should be "adopted" by the District Administration and the lead bank jointly.
·     While banks would be responsible for credit disbursement, the State Government would give a commitment for creation of rural infrastructure and support banks to lend and recover their dues.
·     Progress will be monitored at the district level and reported to the corporate offices of the concerned banks.
·     CMDs of banks would give special attention to the CD ratio in such districts.

Direct Benefit Transfer

Direct Benefit Transfer (DBT) was rolled out by Government of India in selected districts since January 2013. Banks have been advised to:

·     Complete account opening and Aadhaar seeding in all the DBT districts.
·     Monitor the progress in seeding of Aadhaar in bank accounts.
·     Provide acknowledgement to the beneficiary of seeding request and also send aconfirmation.
·     form DBT Implementation Co-ordination Committee, along with State Government department concerned, at district level and review the seeding of Aadhaar number in bank accounts.
·     ensure that district and village wise details of BCs engaged and other arrangements made by the bank is displayed on the SLBC website.
·     set up a Complaint Grievance Redressal mechanism in each bank and nominate a Complaint Redressal Officer in each district, to redress the grievances related to ‘seeding of Aadhaar number in bank accounts'.

Service Area Approach (SAA)

The Service Area Approach scheme was reviewed in December 2004 and it was decided to dispense with the restrictive provisions of the scheme while retaining the positive features such as credit planning and monitoring of the credit purveyance. Thus, while the commercial banks and RRBs are free to lend in any rural and semi-urban area, the borrowers have the choice of approaching any branch for their credit requirements except under Government Sponsored schemes.

Dispensing with No Due Certificate
i) Banks have been advised to dispense with obtaining ‘No Due Certificate’ from the individual borrowers (including SHGs & JLGs) in rural and semi-urban areas unless the Government Sponsored Scheme itself provides for obtention of ‘No Dues Certificate’. It is clarified that this policy is also applicable to urban areas including metropolitan cities.

ii)       Banks are encouraged to use an alternative framework of due diligence which could, among others, consist of one or more of the following:

·     Credit history check through credit information companies
·     Self-declaration or an affidavit from the borrower
·     CERSAI registration
·     Peer monitoring
·     Information sharing among lenders
·     Information search (writing to other lenders with an auto deadline)

iii)       Banks are also advised to submit information/data to all Credit Information Companies (CICs).

Monitoring of Financial Inclusion Plans (FIP) –State and District Level

i)       SLBC Convenor banks have been advised to compile /consolidate State wise bank group wise Financial Inclusion Plans for the 3 years and to review the progress in SLBC meetings.

ii)  FIP data needs to be grouped separately for scheduled commercial banks and other banks while presenting in the DCC/SLBC meetings and submitting to regional offices. The data of scheduled commercial banks needs to be further grouped into public sector banks, private sector banks and Regional Rural Banks.
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Based on RBI Circular dt 1/07/15. Please visit www.rbi.org.in for any further clarification if required…..          Poppy