Prudential Norms on Exposures in Call/Notice Money Market
For Commercial Banks
Stage 1:
With effect from the fortnight beginning October 5,2002,lending of scheduled commercial banks in the call/notice money market, on a fortnightly average basis, should not exceed 50 percent of their owned funds (paid –up capital plus reserves) as at the end of March of the previous financial year; however, banks are allowed to lend a maximum of 100 percent of their owned funds on any day during a fortnight.
Borrowings by scheduled commercial banks in the call/notice money market, on a fortnightly average basis, should not exceed 150% of their owned funds or 2% of aggregate deposits as at the end of March of the previous financial year, whichever is higher; however, banks are allowed to borrow a maximum of 250% of their owned funds on any day during a fortnight.
Stage 2:
With effect from the fortnight beginning December14, 2002,lending of scheduled commercial banks in the call/notice money market, on a fortnightly average basis, should not exceed 25 percent of their owned funds (paid –up capital plus reserves); however, banks are allowed to lend a maximum of 50 percent of their owned funds on any day during a fortnight.
Borrowings by scheduled commercial banks in the call/notice money market, on a fortnightly average basis, should not exceed 100% of their owned funds or 2% of aggregate deposits, whichever is higher; however, banks are allowed to borrow a maximum of 125% of their owned funds on any day during a fortnight.
For Primary Dealers
With effect from October 5, 2002, PDs are permitted to lend in call/notice money market upto 25 per cent of their net owned funds (NOF).
Access of PDs to borrow in call/notice money market would be gradually reduced in two stages:
Stage I,
PDs would be allowed to borrow up to 200 per cent of their NOF as at end-March of the preceding financial year. However, this limit would not be applicable for the days on which government dated securities are issued to the market.
Stage I would be operational upon the finalisation of uniform accounting and documentation procedures for repos, allowing rollover of repos, introduction of tripartite repos or collateralised borrowing and lending obligation (CBLO) to the satisfaction of RBI and permitting repos out of available for sale (AFS) category.
Stage II
PDs would be allowed to borrow upto 100 per cent of their NOF. Days on which government dated securities are issued to the market will continue to be exempted from this limit. The implementation of Stage II will commence from one month after permitting sale of repoed securities.
On implementation of the real-time gross settlement (RTGS) system, the above exemptions would be reviewed.
The date of implementation of the Stage I mentioned above would be notified later.
For Commercial Banks
Stage 1:
With effect from the fortnight beginning October 5,2002,lending of scheduled commercial banks in the call/notice money market, on a fortnightly average basis, should not exceed 50 percent of their owned funds (paid –up capital plus reserves) as at the end of March of the previous financial year; however, banks are allowed to lend a maximum of 100 percent of their owned funds on any day during a fortnight.
Borrowings by scheduled commercial banks in the call/notice money market, on a fortnightly average basis, should not exceed 150% of their owned funds or 2% of aggregate deposits as at the end of March of the previous financial year, whichever is higher; however, banks are allowed to borrow a maximum of 250% of their owned funds on any day during a fortnight.
Stage 2:
With effect from the fortnight beginning December14, 2002,lending of scheduled commercial banks in the call/notice money market, on a fortnightly average basis, should not exceed 25 percent of their owned funds (paid –up capital plus reserves); however, banks are allowed to lend a maximum of 50 percent of their owned funds on any day during a fortnight.
Borrowings by scheduled commercial banks in the call/notice money market, on a fortnightly average basis, should not exceed 100% of their owned funds or 2% of aggregate deposits, whichever is higher; however, banks are allowed to borrow a maximum of 125% of their owned funds on any day during a fortnight.
For Primary Dealers
With effect from October 5, 2002, PDs are permitted to lend in call/notice money market upto 25 per cent of their net owned funds (NOF).
Access of PDs to borrow in call/notice money market would be gradually reduced in two stages:
Stage I,
PDs would be allowed to borrow up to 200 per cent of their NOF as at end-March of the preceding financial year. However, this limit would not be applicable for the days on which government dated securities are issued to the market.
Stage I would be operational upon the finalisation of uniform accounting and documentation procedures for repos, allowing rollover of repos, introduction of tripartite repos or collateralised borrowing and lending obligation (CBLO) to the satisfaction of RBI and permitting repos out of available for sale (AFS) category.
Stage II
PDs would be allowed to borrow upto 100 per cent of their NOF. Days on which government dated securities are issued to the market will continue to be exempted from this limit. The implementation of Stage II will commence from one month after permitting sale of repoed securities.
On implementation of the real-time gross settlement (RTGS) system, the above exemptions would be reviewed.
The date of implementation of the Stage I mentioned above would be notified later.