The Hindu Business Line : Minimum rating of `AA+' — `Eligible securities' status for RNBC investments

THE Reserve Bank of India said on Thursday that investments of Residuary Non-Banking Companies (RNBCs) in Certificates of Deposits and bonds and debentures of companies will be considered as eligible securities till the ratings are of the minimum investment grade.

The central bank said in a notification that this will apply to investments, which have a minimum rating of `AA+' or equivalent grade rating.

These modifications have been made to smoothen the transition of RNBCs for compliance with the revised directions announced in the RBI's mid- term review of annual policy statement for 2004-05. The balances in current accounts with commercial banks will also be considered eligible if they are certified by the respective bankers and are held in the name of the RNBC to the extent of quarterly average of the day end balances.

For compliance with connected lending relationships guidelines, RNBCs should submit information in respect of loans and advances given to directors up to December 31, 2004 before January 31, 2005 and submit a quarterly report thereafter, said RBI in a notification.

For `fit and proper' status of board of directors a time-bound compliance plan should be submitted by end of January 2005.

The Know Your Customer guidelines initially should be complied in case of existing large customers (deposits exceeding Rs 1 lakh) and details of other customers must be updated at the time of renewal of deposits.

RNBCs should adopt a uniform policy for appointment and verification of agents and sub-agents and ensure their books of accounts are available for audit and inspection. All deposit receipts should also bear the name of RNBC and the agent or sub-agent and their contact details.In case of agency commission, the rates, structure and the actual amounts paid should be reported to regional office of RBI quarterly and first report should be submitted by January 31, 2005.

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