2.
The aforesaid prudential requirements were prescribed in view of the continued
high credit growth observed in specific sectors. On a review, it has now been
decided, as a countercyclical measure, to effect the following changes in the
aforesaid prudential norms, with immediate effect:
a) Provisioning
Norms: The provisioning requirements for all types of standard assets stand
reduced to a uniform level of 0.40 per cent except in the case of direct advances
to agricultural and SME sectors, which shall continue to attract a provisioning
of 0.25 per cent, as hitherto.
The revised norms would
be effective prospectively but the provisions held at present should not be reversed.
However, in future, if by applying the revised provisioning norms, any provisions
are required over and above the level of provisions currently held for the standard
category assets, these should be duly provided for.
b)
Risk weights: The risk weights for the banks’ claims on corporates, those
secured by commercial real estate and the claims on the NBFC-ND-SI stand revised
as follows:
(i) Claims on corporates:
All unrated claims, long term as well as short term, regardless of the amount
of claim, on the corporates shall attract a uniform risk weight of 100 per cent.
(ii) Claims secured by commercial real estate:
Such claims would attract a risk weight of 100 per cent as against the extant
risk weight of 150 per cent.
(iii) Claims on NBFC-ND-SI:
The claims on the rated as well as unrated NBFC-NDSI (other than AFCs), regardless
of the amount of claim, shall be uniformly risk weighted at 100 per cent.
As
regards the claims on AFCs, there is no change in the risk weights, which would
continue to be governed by the credit rating of the AFC, except the claims that
attract a risk weight of 150 per cent under the New Capital adequacy Framework,
which shall be reduced to a level of 100 per cent.
3. The
aforesaid modifications would also apply to banks under the Basel I framework.
Yours
faithfully,
(Vinay Baijal)
Chief General Manager