What changed
The Reserve Bank issued an updated Master Circular that consolidates and supersedes earlier notifications, specifically Notification No. DNBS.2/CGM(CSM)-2003 dated April 23, 2003, and related circulars. The circular now reflects all instructions current as of June 30, 2009, providing a single reference document for SCs and RCs.
What it means for you
Banks and lenders dealing with SCs/RCs must refer to this updated Master Circular for compliance with registration, prudential norms, and asset reconstruction measures. The circular clarifies definitions such as non-performing asset (180-day overdue period) and fair value, impacting how financial assets are acquired and managed. It ensures uniformity in regulatory expectations for all entities registered under the SARFAESI Act.
What you must do
- Review the updated Master Circular for any changes in prudential norms or asset reconstruction procedures.
- Ensure your SC/RC registration and operations align with the consolidated guidelines effective June 30, 2009.
- Update internal compliance checklists to reference this circular instead of older individual notifications.
- Train relevant staff on the definition of NPA (180-day overdue) and fair value calculation as per the circular.
Who it affects
Securitisation Companies (SCs), Reconstruction Companies (RCs), Banks originating financial assets for securitisation, Lenders using SARFAESI Act for asset recovery
Does this circular replace all earlier SARFAESI guidelines?
Yes, this Master Circular consolidates and updates all instructions from the April 23, 2003 notification and related circulars, serving as the single reference document as of June 30, 2009.
What is the NPA definition under these guidelines?
A non-performing asset is one where interest or principal is overdue for 180 days or more from the date of acquisition or the contractual due date, whichever is later.
Are trusts managed by SCs/RCs fully covered by these directions?
No, certain provisions (like registration and prudential norms) do not apply to trusts mentioned in paragraph 8 of the circular, though other parts may still be relevant.