What changed
The name of Bank of Punjab Limited was excluded from the Second Schedule to the RBI Act, 1934, effective October 1, 2005. This was notified via RBI notification DBOD. No. PSBD.353/16.01.130/2005-06 dated October 7, 2005, and published in the Gazette of India on October 29, 2005.
What it means for you
For Bank of Punjab, losing scheduled bank status means it can no longer access RBI's liquidity facilities or borrow from the central bank at the repo rate. For other banks, this signals a regulatory action that may follow mergers or restructuring, and they should review counterparty exposure to such entities.
What you must do
- Verify if your bank has any outstanding exposure to Bank of Punjab Limited and assess credit risk accordingly.
- Update internal records to reflect that Bank of Punjab is no longer a scheduled commercial bank.
- Monitor RBI notifications for similar exclusions that may affect other entities in your portfolio.
Who it affects
Bank of Punjab Limited, All scheduled commercial banks with exposure to Bank of Punjab, RBI's regulatory and supervisory divisions
What does exclusion from the Second Schedule mean for a bank?
It means the bank loses its status as a scheduled commercial bank, which restricts its access to RBI's liquidity facilities, interbank borrowing at preferential rates, and certain regulatory benefits.
When did this exclusion take effect?
The exclusion was effective from October 1, 2005, as per the RBI notification dated October 7, 2005.
Should other banks take any action regarding this exclusion?
Yes, banks should review any existing exposures to Bank of Punjab Limited and update their internal systems to reflect its non-scheduled status for risk management and regulatory reporting.