Money & Banking

RBI extends credit relaxation in J&K

Press Trust of India Mumbai | Updated on July 29, 2011 Published on July 29, 2011

To encourage trade and industry in Jammu and Kashmir, the Reserve Bank today extended concessions to bank customers in the State till March 31, 2012.

“It has been decided that the concessions or credit relaxations to borrowers or customers in the State of Jammu and Kashmir ... will continue to be operative for a further period of one year, i.e., up to March 31, 2012,” the apex bank said in a notification.

The relaxations had been first announced in 2003 with a view to ensuring increased flow of credit to trade and industry in the State.

Under them, banks are allowed to sanction increased working capital facilities to customers depending on the merits of each case.

For small borrowers in the unorganised sector, relaxation of up to a maximum of 50 per cent of the norms accepted for last sanction could be allowed.

Besides, all borrowal accounts could be subjected to review by the banks concerned within a period of three months and need based increased working capital facilities may be sanctioned to borrowers without delay.


Banks are allowed to honour small fixed deposit receipts of up to Rs 10,000 of the Kashmiri migrants at the designated branches without verifying details from the branch of origin against indemnity bond.

Among other concessions announced in 2003 and which have been extended, the banks are allowed to adopt a flexible and pragmatic approach as regards debt-equity ratio, especially for small projects.

Reschedulement of the repayment programme is allowed in deserving cases.

The banks can review all irregular accounts within three months with a view to exploring the possibility of regularising them through sanctioning additional working capital facilities.

Lenders are also permitted to extend the period of realisation of bills purchased and advance bills for collection by up to one month by their branch managers.

Under the concessions, banks are allowed to continue the facility for transfer of bank accounts or funds maintained with their branches in the Kashmir Valley to some other designated branch outside the Valley, at the request of their customers with necessary safeguards.

Similarly, banks are allowed to arrange for designating specific branches outside the Kashmir Valley to receive instruments drawn on their branches in the Valley.

Among other measures, banks are encouraged to take special steps to educate and inform the managers and controllers of their branches in the state about the details of package and corporate strategies for implementing them.

The banks in J&K are also tasked to make special endeavours for avoiding delays in all matters of providing banking services.

They are also expected to submit quarterly data on progress made by branches in implementing the package of concessions.

Published on July 29, 2011
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