DBOD.No. Dir. BC. 107/13.07.05/98-99

November 11, 1998
Kartika 20, 1920 (Saka)

All Scheduled Commercial banks

Dear Sirs,

Rediscounting of bills by banks

Please refer to paragraph 3(vii) of our circular DBOD No. BC. 8/16.13.100/92-93 dated July 27, 1992 in terms of which banks are not allowed to rediscount bills discounted by non-bank financial companies.

 2. The non-bank finance companies are playing an important role in meeting the financing needs of the transport sector particularly the commercial vehicles segment including trucks, cars, three wheelers and other light commercial vehicles. However, the ability of the NBFCs to meet these requirements is constrained because of non-availability of rediscounting facilities from banks. We understand that the bills arising from such financing represent genuine sale of commercial vehicles which can be verified as each vehicle has a distinct engine number and chasis number recorded on the invoice accompanying the bills.

3. In view of the above, it has been decided that banks may rediscount bills discounted by NBFCs arising from sale of commercial vehicles including light commercial vehicles subject to normal lending safeguards.

Yours faithfully

(Radhe Shyam)

Additional Chief General Manager