What changed
The earlier circular (December 14, 2007) had provided a six-month transition period ending around June 2008. RBI has now extended this by another three months, giving banks until September 13, 2008 to fully comply with the requirements.
What it means for you
Banks get additional time to adjust their lending practices to mutual funds and issuance of IPCs to meet the capital market exposure guidelines. This extension helps banks avoid immediate compliance pressure and manage their exposure more smoothly.
What you must do
- Review your bank's current exposure to mutual funds and IPCs against the new deadline of September 13, 2008.
- Ensure internal systems and processes are updated to comply with the capital market exposure norms by the extended date.
- Communicate the revised timeline to relevant departments handling capital market lending.
- Monitor any further RBI guidance on this matter to stay compliant.
Who it affects
All scheduled commercial banks (excluding RRBs), Bank treasury and credit departments handling capital market exposures, Mutual funds and entities relying on bank loans or IPCs
What is the new deadline for compliance with capital market exposure norms?
The transition period has been extended by three months, so banks must comply by September 13, 2008.
Does this extension apply to all banks?
Yes, it applies to all scheduled commercial banks, but regional rural banks (RRBs) are excluded from this circular.
What happens if a bank does not comply by the new deadline?
The circular does not specify penalties, but banks should aim to comply by September 13, 2008 to avoid potential regulatory action.