Business Daily from THE HINDU group of publications
Thursday, Oct 30, 2008
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Business Daily from THE HINDU group of publications Thursday, Oct 30, 2008 ePaper | Mobile/PDA Version | Audio | Blogs |
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Financial Policy Money & Banking - RBI & Other Central Banks RBI eases off-balance sheet exposure norms
Our Bureau Mumbai, Oct. 29 The Reserve Bank of India has relaxed the prudential norms for off-balance sheet exposure of banks. Banks would now only need to classify overdues arising from forward contracts and plain vanilla swaps and options of a client as non-performing assets (NPAs). Accordingly, any amount, representing positive mark-to-market value of the foreign exchange derivative contracts (other than forward contract and plain vanila swaps and options) that were entered into during the period April 2007 to June 2008, which has already crystallised or might crystallise in future could be parked in a separate account maintained in the name of the client. This amount, even if overdue for a period of 90 days or more would not make other funded facilities of clients as NPAs, the RBI said in notification. The RBI had earlier said banks are required to treat any receivable representing positive mark-to-market value of a derivative contract, which is overdue for a period of 90 days or more, as a non-performing asset. It had also asked banks to classify all other funded facilities granted to the client as non-performing asset. These relaxations would also be applicable to the foreign branches of Indian banks. The move is likely to help Indian banks with overseas branches to post better financial results. More Stories on : Financial Policy | RBI & Other Central Banks | Non-Performing Assets | Forex | Derivatives Markets
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