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Rbi Master Circular Essay

3048 words - 13 pages

1. What are the prudential exposure norms on advances? (master circular)
2. What is the provisioning norm of standard assets? (master circular)
3. If an unsecured loan becomes NPA, what are the provisioning norms at substandard and doubtful stage?
4. Which are the cases where bank can charge interest without reference to BPLR and/or Base Rate?
5. What is out of Order Account with reference to a borrowal account & under Non Performing Assets? (master circular)
6. What is commercial paper, who can raise money by way of CP? Can u give loan against the CP?
7. Name three Para-Banking activities permitted by RBI to banks operating in India? Against the backdrop of equipment leasing, ...view middle of the document...

What is Basel II? How it will impact bank in India?
17. Discuss the detail emerging trend in Indian Banking sector since 1991.
18. What is Non-performing assets (NPA) in banks? What are the provisioning norms for NPA?
19. What is Risk management in banks and how it is implemented?
20. How working capital requirements are assessed by banks?
21. Infrastructure landing, rural banking?

20. Working Capital Requirements
2.1 The assessment of working capital requirement of borrowers, other than SSI units, requiring fund based working capital limits upto ` 1.00 crore and SSI units requiring fund based working capital limits upto ` 5.00 crore from the banking system may be made on the basis of their projected annual turnover.
2.2 In accordance with these guidelines, the working capital requirement is to be assessed at 25% of the projected turnover to be shared between the borrower and the bank, viz. borrower contributing 5% of the turnover as net working capital (NWC) and bank providing finance at a minimum of 20% of the turnover. Projected turnover may be interpreted as 'Gross Sales' including excise duty.
2.3 The banks may, at their discretion, carry out the assessment based on projected turnover basis or the traditional method. If the credit requirement based on traditional production / processing cycle is higher than the one assessed on projected turnover basis, the same may be sanctioned, as borrower must be financed up to the extent of minimum 20 per cent of their projected annual turnover. The projected annual turnover would be estimated on the basis of annual statements of accounts or other documents such as returns filed with sales-tax / revenue authorities. Actual drawals may be allowed on the basis of drawing power to be determined by UCBs after excluding unpaid stocks.
2.4 Drawals against the limits should be allowed against the usual safeguards including drawing power and it is to be ensured that the same are used for the purpose intended. Banks will have to ensure regular and timely submission of monthly statements of stocks, receivables, etc., by the borrowers and also periodical verification of such statements vis-a-vis physical stocks by their officials.
2.5 In respect of borrowers other than SSI units, requiring working capital limits above ` 1 crore and for SSI units requiring fund based working capital limits above ` 5 crore, UCBs may determine the working capital requirements according to their perception of the credit needs of borrowers. UCBs may adopt turnover method or cash budgeting method or any other method as considered necessary. However, UCBs may ensure that the book-debt finance does not exceed 75% of the limits sanctioned to borrowers for financing inland credit sales. The remaining 25% of the credit sales may be financed through bills to ensure greater use of bills for financing sales.

India cannot have a healthy economy without a sound and effective banking system. The banking system...

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