(a) whether the Reserve Bank of India has directed banks not to invest in non-convertible
debenture of corporates unless they disclose the purpose for which the funds are being
raised; and
(b) if so, the details thereof?
(a) whether the Reserve Bank of India has directed banks not to invest in non-convertible
debenture of corporates unless they disclose the purpose for which the funds are being
raised; and
(b) if so, the details thereof?
MINISTER OF THE STATE IN THE MINISTRY OF FINANCE (SHRI NAMO NARAIN MEENA)
(a) & (b): Reserve Bank of India has, vide their circular dated 31.12.2010 on `Investment
in Non-Statutory Liquidity Ratio (SLR) Securities - Non-Convertible Debentures (NCDs) of
maturity upto one year`, permitted the banks to invest in NCDs with original or initial
maturity upto one year issued by corporates including Non-Banking Finance Companies.
However, while investing in such instruments banks should be guided by the extant
prudential guidelines in force and ensure that the issuer has disclosed the purpose
for which the NCDs are being issued in the disclosure document and such purposes are
eligible for bank finance.