RBI ISSUES NORMS FOR LOAN WAIVER
The Reserve Bank of India said the amount eligible for waiver under the Government package
for small and marginal farmers would be treated as “performing assets” by banks. It will also be considered as claim on the Government with zero risk weight for meeting capital adequacy norms.
As per Central Bank instructions to banks, this waiver should be transferred to a separate account, and can be treated as a performing asset only if adequate provision is made for the loss in Present Value (PV) terms. The discount rate for arriving at the loss in PV terms should be taken as 9.56 per cent, which is the yield to maturity on 364-day Treasury Bills today.
for small and marginal farmers would be treated as “performing assets” by banks. It will also be considered as claim on the Government with zero risk weight for meeting capital adequacy norms.
As per Central Bank instructions to banks, this waiver should be transferred to a separate account, and can be treated as a performing asset only if adequate provision is made for the loss in Present Value (PV) terms. The discount rate for arriving at the loss in PV terms should be taken as 9.56 per cent, which is the yield to maturity on 364-day Treasury Bills today.
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