abhishreshthaa
Abhijeet S
Limits on discounting of UCBs Pay Orders
UCBs should note that commercial banks may establish appropriate inter-bank monetary limits for discounting of pay orders issued by UCBs, taking into account the size of their deposits / net-worth etc.
This is response to the Co-operative scam story in the history of Indian banking system.
Equity Finance
It has been decided to bring in the following changes in urban co-operative banks’ finance against shares/debentures:
UCBs should not entertain any fresh proposals for lending directly or indirectly against security of shares either to individuals / stockbrokers or to any other entity. They should not grant advances for financing Initial Public Offerings (IPOs).
If UCBs have lent to stock brokers or have made direct investment in shares which were not permissible activities, they should take immediate steps to recall such advances / dispose off such investments.
Where the UCBs have granted and disbursed advances to individuals against security of stocks / debentures up to the permissible limit (i.e., Rs.10 lakh against physical scrips and Rs.20 lakh against physical demat shares), such advances should be repaid by the borrowers by the contracted date. Such facilities should, under no circumstances, be renewed.
The management of the UCBs should immediately communicate these instructions as also the steps being taken by them to implement the new guidelines to the concerned borrowers.
The UCBs should report, to the respective regional offices of the Reserve Bank, their existing out-standings to individual borrowers and other entities against shares on a quarterly basis in the prescribed format. Any violation of these instructions will attract penalties.
UCBs should note that commercial banks may establish appropriate inter-bank monetary limits for discounting of pay orders issued by UCBs, taking into account the size of their deposits / net-worth etc.
This is response to the Co-operative scam story in the history of Indian banking system.
Equity Finance
It has been decided to bring in the following changes in urban co-operative banks’ finance against shares/debentures:
UCBs should not entertain any fresh proposals for lending directly or indirectly against security of shares either to individuals / stockbrokers or to any other entity. They should not grant advances for financing Initial Public Offerings (IPOs).
If UCBs have lent to stock brokers or have made direct investment in shares which were not permissible activities, they should take immediate steps to recall such advances / dispose off such investments.
Where the UCBs have granted and disbursed advances to individuals against security of stocks / debentures up to the permissible limit (i.e., Rs.10 lakh against physical scrips and Rs.20 lakh against physical demat shares), such advances should be repaid by the borrowers by the contracted date. Such facilities should, under no circumstances, be renewed.
The management of the UCBs should immediately communicate these instructions as also the steps being taken by them to implement the new guidelines to the concerned borrowers.
The UCBs should report, to the respective regional offices of the Reserve Bank, their existing out-standings to individual borrowers and other entities against shares on a quarterly basis in the prescribed format. Any violation of these instructions will attract penalties.