What changed
RBI issued a notification on May 17, 2007, directing the exclusion of Bharat Overseas Bank Ltd from the Second Schedule of the RBI Act, 1934, effective from April 1, 2007. The exclusion was made under clause (b) of sub-section (6) of Section 42 of the Act.
What it means for you
The exclusion removes Bharat Overseas Bank Ltd from the Second Schedule of the RBI Act, 1934, meaning it is no longer a scheduled bank. The source does not specify further regulatory consequences.
What you must do
- Review historical records to ensure any past transactions with Bharat Overseas Bank are correctly classified post-exclusion.
- Update internal systems to reflect that Bharat Overseas Bank is no longer a scheduled bank for regulatory reporting purposes.
- Monitor RBI notifications for similar exclusions that may affect counterparty risk assessments.
Who it affects
Bharat Overseas Bank Ltd (now excluded), Banks that had interbank exposures or transactions with Bharat Overseas Bank
What does exclusion from the Second Schedule mean for a bank?
It means the bank is no longer classified as a scheduled commercial bank under the RBI Act, 1934. This removes its eligibility for certain central bank facilities, like borrowing at the bank rate, and alters its reserve requirements.
Why was Bharat Overseas Bank excluded?
The notification does not specify the reason. It only states the exclusion was under Section 42(6)(b) of the RBI Act, effective April 1, 2007. Typically, such exclusions occur due to merger, liquidation, or voluntary surrender of scheduled status.
Does this notification affect current banking operations?
No, this is a historical notification from 2007. It is relevant for record-keeping and understanding past regulatory actions, but it does not impact current banking operations.