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Banking | Banks can deduct floating provision: RBI

Banking | Banks can deduct floating provision: RBI
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First Published: Thu, Aug 27 2009. 11 34 PM IST
Updated: Thu, Aug 27 2009. 11 34 PM IST
Mumbai: The Reserve Bank of India (RBI) on Thursday allowed banks to deduct “floating provision” from their gross non-performing assets to come to a lower net non-performing assets (NPA). This will be allowed until RBI completes its review of the provision.
Banks deduct certain provisions from the gross non-performing assets or total bad debts, to arrive at a net NPA figure. In March, RBI had instructed banks not to deduct the floating provisions from provisions already made to arrive at a net NPA figure.
RBI said in a notification that various agencies working to come up with an adequate provisioning norm for banks will likely take some time to come to a conclusion.
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RBI suggests stricter credit norms for realtors
Mumbai: The Reserve Bank of India (RBI) on Thursday instructed banks and housing finance companies to extend credit to property developers only after ensuring proper disclosures have been made by the borrower.
RBI cited a Bombay high court instruction which said banks should insist on disclosure of the charge or any other liability on the plot, in the brochure, pamphlets that are published in newspapers or magazines.
RBI said banks should not extend loans unless the disclosure mentions the names of the banks to which the property is mortgaged and that the developer should indicate in their pamphlets or brochures that they would provide No Objection Certificate or permission of the mortgagee bank for sale of property, if required.
— Anup Roy
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First Published: Thu, Aug 27 2009. 11 34 PM IST