RBI / 2004 /247 REF. DBS. FID. No. C- 15 / 01.02.00 / 2003-04
June 15, 2004
The CEOs of the all-India Term
Lending and Refinancing Institutions
(Exim Bank, IDBI, IDFC Ltd., IFCI
Ltd., IIBI Ltd., NABARD, NHB, SIDBI and TFCI Ltd.)
Dear Sir,
Risk Weight for Exposure to Public
Financial Institutions (PFIs)
Please refer to para 2(c) of circular
DBS.FID.No.C-35/01.02.00/1998-99 dated December 3, 1998 wherein FIs were advised
that their investments in the bonds / debentures of certain PFIs would attract
a uniform risk weight of 20 per cent.
2. In this connection, a reference
is invited to para 118 of the Annual Policy Statement for the year 2004-05 (paragraph
reproduced in the Annex) announced by the Governor on May 18, 2004. The
full text of the policy is available at RBI website (www.rbi.org.in).
3. Accordingly, it has been decided
that with effect from April 1, 2005, exposures to all PFIs will attract a risk
weight of 100 per cent.
4.Please acknowledge receipt.
Yours faithfully,
(S. S. Gangopadhyay)
Chief General Manager
Encl: 1
EXTRACT FROM ANNUAL POLICY 2004-05
Risk Weight for Exposure to Public
Financial Institutions
118. At present, exposures of banks/FIs
to specified public financial institutions (PFIs) attract a risk weight of 20
per cent for capital adequacy purposes. The financial positions of PFIs are
divergent. As such, preferential treatment to PFIs for capital adequacy purposes
on a privileged basis is not justified. Accordingly, it is proposed that:
- With effect from April 1, 2005, exposures on
all PFIs will attract a risk weight of 100 per cent.
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