What changed
This master circular consolidates all previous instructions on resource raising for all-India term lending and refinancing institutions up to June 30, 2012. It replaces the earlier master circular dated July 1, 2011, and includes updated guidelines on bonds, term deposits, CDs, CPs, and ICDs under an umbrella limit of 100% of NOF, with temporary enhancements for NABARD and EXIM Bank.
What it means for you
Banks and FIs now have a single reference document for compliance, reducing ambiguity. The circular aims to harmonize norms across statutory bodies and limited companies, ensuring fair competition. It also streamlines approval processes via a Standing Committee for bond issuances. The umbrella limit is set at 100% of net owned funds, with specific temporary increases for NABARD and EXIM Bank.
What you must do
- Review the consolidated master circular to ensure all resource raising activities comply with updated norms, including the umbrella limit of 100% of NOF (or 150% for NABARD and EXIM Bank within specified periods).
- Submit required returns (Annex 3 and 4) monthly to RBI for aggregate resources and bonds.
- Coordinate with the Standing Committee for timely approval of bond issuances by providing complete details.
- Update internal policies to align with the umbrella limit framework for term deposits, CDs, CPs, and ICDs.
Who it affects
Exim Bank, NABARD, NHB, SIDBI, All-India term lending and refinancing institutions
What is the 'umbrella limit' mentioned in the circular?
The umbrella limit refers to the aggregate cap on resource raising through instruments like term deposits, term money borrowings, CDs, CPs, and ICDs, which should not exceed 100% of net owned funds (NOF) of the FI as per its latest audited balance sheet. However, for NABARD and EXIM Bank, the limit is temporarily enhanced to 150% of NOF up to December 31, 2012 and June 30, 2013 respectively.
Does this circular apply to commercial banks?
No, it applies specifically to all-India term lending and refinancing institutions: Exim Bank, NABARD, NHB, and SIDBI.
How does the Standing Committee for bond issuances work?
The Standing Committee, including FI nominees, meets on the same or next day of receiving a bond issue request to expedite approval. FIs must submit details like amount, purpose, and special features.