DBOD.No. BP.BC.32/21.04.018/98
April 29, 1998
Vaishakha 9, 1920 (Saka)
All Commercial Banks
(excluding Regional Rural
Banks)
Dear Sir,
Capital adequacy, disclosures in balance sheets
(i) Capital Adequacy - Risk
Weights in respect of investments
Under the existing instructions
(c.f. para. 6A of DBOD. Circular No. BP. BC. 117/21.01.002/92 dated April 22,
1992), investments in government and other trustee securities carry zero risk
weight and other investments carry 100 per cent risk weight.
It is clarified that
investments in Indira Vikas Patra/Kisan Vikas Patra (IVP/KVP) and investments
in Bonds and Debentures where payment of interest and principal is guaranteed
by Central/State Government shall also carry zero risk weight. All other
investments shall carry 100 percent risk weight.
(ii) Disclosures in Balance
Sheets
In terms of paragraph 2 of
circular DBOD. No. BP. BC. 9/21.04.018/98 dated January 27, 1998, banks were
advised to disclose certain business ratios in the 'Notes on accounts'
commencing from the Balance Sheet as at 31st March 1998.
In this connection, it is
clarified as under:
(a) In the following ratios
viz. (i) interest income as percentage to working funds, (ii) non-interest
income as percentage to working funds, (iii) operating profit as percentage
to working Funds, 'working funds' should be reckoned as average of total of
assets (excluding accumulated losses, if any) as reported to Reserve Bank of
India in form X under Section 27 of Banking Regulation Act, 1949 during the
12 months of the financial year. However, the ratio of 'return on assets'
would be with reference to working funds (i.e. total of assets excluding
accumulated losses, if any) on the balance sheet date.
(b) For the purpose of
computation of the business per employee (deposits plus advances) inter bank
deposits may be excluded.
Yours faithfully,
(C.R. Muralidharan)
General Manager