RBI/2004/70
RPCD.CO.RRB.BC.66/03.05.34/2003-04 February 23,2004 The Chairman of all
RRBs /Sponsor Banks
Dear Sir,
Prudential guidelines on investment in non-SLR debt securities
Please refer to our circular RPCD.No.RRB.BC.76/03.05.34/1996-97
dated December 13, 1996 regarding avenues of investment of surplus Non-SLR funds
of Regional Rural Banks, in terms of which RRBs were permitted to invest their
non-SLR surplus funds in certain avenues subject to the terms and conditions
laid down from time to time. In terms of Paragraph 133 of the Statement on Monetary
and Credit Policy for the year 2002-03, banks were advised to observe further
prudence in order to contain the risk arising out of their non-SLR investment
portfolio.
2. SEBI has since advised the guidelines required to be complied
with by listed companies issuing debt securities on a private placement basis
and which have been listed on a stock exchange, vide circular SEBI /MRD/ SE/AT/
36/ 2003/30/9 dated September 30, 2003.
3. In order to contain the risks arising out of non-SLR investment
portfolio of banks, in particular through private placement, it has been decided
to issue guidelines as furnished in the Annexure on banks’ investment in non-SLR
debt securities. These guidelines come into force with immediate effect and
have to be fully complied with by March 31, 2004.
4. You are advised to place the contents of this circular together
with its enclosures before the Board of your bank.
5. Please acknowledge receipt to our concerned Regional Office.
Yours faithfully,
(C.S. Murthy)
Chief General Manager In-charge
Encls: As above
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