DBOD.No. MC.02/19.06.02/97-98

July 20, 1998

Ashadha 29, 1920 (Saka)

The Chairmen of Private Sector Banks

Dear Sir,

Action plan for private sector banks for the period April 1998 - March 2000

Please refer to our circular letter DBOD. No. MC. 2/19.06.01/96-97 dated 15th July 1996 regarding continuation of the Action Plan exercise and extending the plan period from April 1996 to March 1998. As you are aware, banks have been submitting to us their half yearly progress reports in the format circulated with our circular letter DBOD. No. MC. 14/19.06.01/94-95 dated 28th July 1994 and subsequent amendments thereto vide our circular letter DBOD. No. MC.15/19.06.01/96-97 dated 4th September 1996. We have also been holding periodical discussions with the Chairmen/Chief Executives of banks reviewing the capital adequacy, financial position, reduction in non-performing assets, profitability and other major aspects relating to the operations of the banks as revealed in their financial inspections as also the progress made in the implementation of Action Plans.

2. Considering the importance of the discussions and review machinery in vital areas of the bank's functioning, it has been decided to continue with the action plan exercise for your bank. You are, therefore, advised to draw suitable action plan for the period from April 1998 to March 2000 broadly on the existing lines spelling out the strategy of the bank for strengthening the capital base, better credit administration, recovery of overdues, reduction of non-performing advances with suitable targets, increased productivity in terms of business per employee, increase in income and control over expenditure for improvement in overall profitability and steps taken towards computerisation (including compliance with Y2K problem). You may like to draw up the plan in the light of the experience gained by the bank as also the problems your bank is likely to encounter during the Action plan period 1998-2000. The plan document should be sent by end of August 1998 to our Regional Office under whose jurisdiction your bank's Head Office is functioning. A copy of the same should also be sent to us. The data/progress reports in the existing format as at the end of March and September may be submitted to our Regional Office and also to us at half yearly intervals so as to reach us by 15th May and 15th November respectively. The banks should ensure that the progress reports are submitted to RBI positively before the above dates.

Yours faithfully,

(Sudha Damodar)

Assistant General Manager