What changed
The transition period for banks to meet the requirements on loans to mutual funds and issuance of Irrevocable Payment Commitments (IPCs) was extended from June 30, 2009 to December 31, 2009. This follows a previous extension granted in March 2009.
What it means for you
Banks get additional time to align their lending practices to mutual funds and IPC issuance with RBI's capital market exposure guidelines. This provides operational relief and avoids immediate compliance pressure, but the deadline is now fixed at year-end 2009.
What you must do
- Review current loan exposures to mutual funds and IPC issuance against the December 2007 circular requirements.
- Ensure full compliance with the capital market exposure norms by December 31, 2009.
- Update internal systems and reporting processes to track the transition deadline.
- Communicate the revised timeline to relevant business and risk management teams.
Who it affects
All scheduled commercial banks (excluding RRBs), Bank treasury and credit departments handling mutual fund lending, Banks issuing Irrevocable Payment Commitments
What is the new deadline for compliance with the capital market exposure norms for loans to MFs and IPCs?
The transition period has been extended to December 31, 2009, from the earlier June 30, 2009 deadline.
Which banks are covered by this circular?
All scheduled commercial banks, excluding Regional Rural Banks (RRBs), are required to comply.
What happens if banks do not comply by the new deadline?
The circular does not specify penalties, but banks must ensure full compliance by December 31, 2009, as per the earlier December 2007 guidelines.