The Reserve Bank of India (RBI) on July 25, 2024, issued a notification regarding Bank Finance against Shares and Debentures.
The following has been stated: -
•With reference to the circular UBD.No.DS.PCB.CIR.16/13.05.00/2001-02 dated October 22, 2001, and para 6.6.5 of Master Circular - Exposure Norms and Statutory / Other Restrictions – UCBs dated January 16, 2024, the Primary (Urban) Co-operative Banks (UCBs) were advised that the aggregate of their all loans against the security of shares and debentures should be within the overall ceiling of 20 percent of their owned funds.
•It has been decided that the aforementioned overall ceiling of 20 percent shall be linked to the Tier I capital of the bank as of March 31 of the previous financial year, as defined in Master Circular - Prudential Norms on Capital Adequacy - Primary (Urban) Co-operative Banks (UCBs) dated April 1, 2024, as amended from time to time.
•The change stipulated in paragraph 2 above shall be effective from January 01, 2025. All other related provisions of the aforesaid circulars remain unchanged.
[Notification No. RBI/2024-25/54 DOR.CRE.REC. 29/07.10.002/2024-25]
