What changed
The transition period for banks to comply with the requirements on loans to mutual funds and issue of irrevocable payment commitments (IPCs) was extended from December 13, 2008 to March 31, 2009. This follows a previous extension granted in September 2008.
What it means for you
Banks get additional time to adjust their capital market exposure practices without facing immediate non-compliance. This extension provides operational relief, especially for banks with significant mutual fund lending or IPC issuance, allowing smoother transition to the stricter norms.
What you must do
- Review your bank's current exposure to mutual fund loans and IPCs to ensure alignment with the original December 2007 circular requirements.
- Plan to fully comply with the capital market exposure norms by the new deadline of March 31, 2009.
- Monitor any further RBI communications on this matter for potential changes or final guidelines.
Who it affects
All scheduled commercial banks (excluding RRBs), Banks with mutual fund lending portfolios, Banks issuing irrevocable payment commitments
What is the new deadline for compliance with the capital market exposure norms?
The transition period has been extended to March 31, 2009, from the earlier deadline of December 13, 2008.
Which circulars are being referenced in this extension?
This extension relates to the requirements in RBI circular DBOD.Dir.BC.57/13.03.00/2007-2008 dated December 14, 2007, and the previous extension was given in circular DBOD.Dir.BC.41/13.03.00/2008-2009 dated September 10, 2008.
Does this extension apply to Regional Rural Banks?
No, the circular is addressed to all scheduled commercial banks excluding RRBs.