What changed
RBI issued a circular extending the prudential guidelines on restructuring of advances, originally applicable to scheduled commercial banks, to select All-India Financial Institutions (AIFIs). The guidelines apply mutatis mutandis, meaning with necessary modifications, to these institutions. Provisions related to activities not typically undertaken by AIFIs, such as working capital, overdrafts, and personal loans, are excluded from applicability.
What it means for you
AIFIs like Exim Bank, NABARD, NHB, and SIDBI must now follow the same restructuring norms as banks, ensuring uniformity in handling stressed advances. This aligns their prudential practices with the banking sector, reducing regulatory arbitrage. However, they are exempt from rules on products they don't offer, avoiding unnecessary compliance burden.
What you must do
- Review the enclosed bank restructuring circular (DBOD No.BP.No. 49/21.04.132/2010-11 dated October 7, 2010) for detailed norms.
- Update internal policies to apply these guidelines mutatis mutandis to all advance restructuring activities.
- Identify and exclude provisions related to working capital, overdrafts, and personal loans from implementation.
- Ensure compliance with the new guidelines from the effective date of October 14, 2010.
Who it affects
Exim Bank, NABARD, NHB, SIDBI, All-India Financial Institutions (AIFIs)
Which AIFIs are covered by this circular?
The circular applies to select All-India Term Lending and Refinancing Institutions: Exim Bank, NABARD, NHB, and SIDBI.
Are there any exemptions from these restructuring guidelines?
Yes, provisions related to activities not generally undertaken by AIFIs, such as working capital, overdrafts, and personal loans, are not applicable.
What is the effective date of these guidelines?
The circular was issued on October 14, 2010, and is effective from that date.