DBOD.No. BP.BC.73/21.04.018/98

July 27, 1998

Shravana 5, 1920 (Saka)

All Commercial Banks

(excluding Regional Rural Banks)

Dear Sir,

Inter-branch Accounts - old outstanding credit entries

In terms of instructions contained in our circular DBOD. No. BP. BC. 91/C.686-91 dated February 28, 1991 banks are required to show net balance in Inter-branch Account under 'Other Liabilities and Provisions' (Schedule 5) when in credit and under 'Other Assets' (Schedule 11) when in debit. It has been observed that some banks have large arrears in the reconciliation of inter-branch Accounts which is a cause for serious concern. The matter was examined in detail recently and it has been decided that banks should first segregate the credit entries outstanding for more than five years in inter-branch Account and transfer them to a separate Blocked Account and show it under 'Other Liabilities and Provisions - Others' (Schedule 5) in the Balance Sheet. While arriving at the Net amount of Inter-branch transactions for inclusion under Schedule 5 or 11 as the case may be, the aggregate amount of Blocked Account should be excluded and only the amount representing the remaining credit entris should be netted against debit entries. The balance in the Blocked Account will be reckoned for the purpose of maintenance of CRR/SLR.

2. We further advise that any adjustment from the Blocked Account should be permitted only with the authorisation of 2 officials, one of whom should be from outside the Branch concerned, preferably from the Controlling/Head Office if the amount exceeds Rupees one lakh.

Yours faithfully,

(A. Ghosh)

Chief General Manager