Home › Circulars › RBI/2006-2007/267

NBFCs Told to Check Foodgrain Hoarding via Bank Finance

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2006-2007/267 · issued 23 Feb 2007 · ~1 min read
Quick answerRBI directs systemically important NBFCs (asset size ≥ ₹100 crore) to scrutinize large exposures for foodgrain procurement and report any diversion of funds for hoarding by March 10, 2007.

What changed

RBI issued a circular on February 23, 2007, requiring NBFC-ND-SI to examine their financial exposures to large borrowers for foodgrain procurement. The directive aims to prevent misuse of bank finance for hoarding foodgrains. NBFCs must submit a comprehensive report by March 10, 2007.

What it means for you

NBFCs must proactively monitor large borrower accounts to ensure funds are not diverted for hoarding foodgrains, which could distort markets. This adds compliance burden but aligns with RBI's broader goal of curbing speculative hoarding. Lenders need to strengthen internal audit and reporting mechanisms.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Who it affects

Systemically important non-deposit taking NBFCs (asset size ≥ ₹100 crore), Large borrowers of NBFCs involved in foodgrain procurement, RBI supervisory teams

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Which NBFCs are covered by this circular?

All systemically important non-deposit taking NBFCs with asset size of ₹100 crore and above.

What is the deadline for the report?

The comprehensive report must be submitted to RBI by March 10, 2007.

What action should NBFCs take if they find diversion?

The circular does not specify penalties but expects NBFCs to confirm no diversion; any findings should be reported in the comprehensive report.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #2507: DNBS (PD)CC.No.90/03.10.001/2006-07 — "Misuse of Bank Finance for Hoarding - Status and Action" dated February 23, 2007”
📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/267 DNBS (PD) CC. No.90/ 03.10.001/2006-07 February 23, 2007 All Systemically important Non-Deposit taking NBFCs (all non-deposit taking NBFCs with asset size of Rs. 100 Crore and above) Dear Sir / Madam, Misuse of Bank Finance for hoarding – Status and Action Concerns have been expressed that some of the corporates / entities may be hoarding foodgrains which could have had the benefit of resources from the NBFC finance. NBFC-ND-SI (all non-deposit taking NBFCs with asset size of Rs. 100 Crore and above) are advised to undertake a scrutiny of their financial exposures to large borrowers for procurement of foodgrains. 2. The above class of NBFCs may also consider a quick scrutiny of the accounts on whom they have large exposure and confirm to themselves that funds have not been diverted for procurement of foodgrains with a view to hoarding. 3. NBFC-ND-SI are being sensitized to this issue and hence requested to provide a comprehensive report on the above by March 10, 2007. Yours faithfully, (P Krishnamurthy) Chief General Manager –in -Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/267 · issued 23 Feb 2007. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3290&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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