Reserve Bank of India
Central Office
Urban Banks Department
1^st Floor, Garment House
Worli, Mumbai - 400 018

 

1 April 2002
11 Chaitra 1924(S)

The Chief Executive Officers of all
Primary (Urban) Co-operative Banks
Dear Sir/Madam,

Limit on Credit Exposure to Individual/
Group of borrowers

Please refer to our circular DS.PCB.Cir.39/13.05.00/95-96 dated 16 January 1996 on the captioned subject. In terms of paragraph 2 of the circular, banks had been advised that the exercise of computing the exposure ceiling should be conducted every year after the finalisation and audit of balance sheet of the bank is over.

2. In view of the linking of share holding to lending, accretion to share capital is a continuous process in urban co-operative banks. It has, therefore, been decided that accretion to or reduction in the share capital after the balance sheet date may be taken into account for determining exposure ceiling at half yearly intervals, with the approval of Board of Directors. Accordingly, banks may, if they so desire, fix a fresh exposure limit taking into account the amount of share capital available as on 30 September.

3. Urban Co-operative Banks are advised that accretions to capital funds other than to share capital such as half yearly profit etc. will not be eligible for reckoning the exposure ceiling as stated above. Banks should also ensure that they do not take exposures in excess of the ceiling prescribed in anticipation of infusion of capital on a future date.

4. Please acknowledge receipt to our concerned Regional Office.

Yours faithfully,

(Sudarshan Sen)
General Manager