{"id":269500,"date":"2022-07-04T12:00:24","date_gmt":"2022-07-04T06:30:24","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=269500"},"modified":"2022-07-04T11:12:51","modified_gmt":"2022-07-04T05:42:51","slug":"rbi-notified-provisioning-requirement-for-investment-in-security-receipts-in-order-to-provide-glide-path-for-the-regional-rural-banks","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2022\/07\/04\/rbi-notified-provisioning-requirement-for-investment-in-security-receipts-in-order-to-provide-glide-path-for-the-regional-rural-banks\/","title":{"rendered":"RBI notified provisioning requirement for Investment in Security Receipts in order to provide glide path for the Regional Rural Banks"},"content":{"rendered":"
\n

   <\/p>\n

On 28-08-2022, Reserve Bank of India (‘RBI') notified that for smooth functioning of the Regional Rural Banks (‘RRBs') and to ensure smooth implementation of Clause 77 of the Master Direction- Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 (‘MD-TLE') notified on 24-09-2021, the difference between the carrying value of Security Receipts (‘SR') should be calculated over a 5-year period starting with the financial year ending 31-03-2022.<\/p>\n

According to Clause 77 of MD-TLE, investments by lenders in SRs issued by Asset Reconstruction Companies (‘ARC') must be valued periodically by calculating the Net Asset Value declared by the ARC based on the recovery ratings received for such instrument. The circular “Guidelines on Sale of Stressed Assets by Banks, excludes the RRB from its ambit. Hence, to provide a glide path for the RRBs it is advised that in respect of valuation of investments in SRs outstanding on the date of issuance of MD-TLE ie.24-09-2021 these have to be followed:<\/p>\n

    \n
  1. \n

    The difference between the carrying value of such SRs must be provided over a 5-year period starting with the financial year ending 31-03-2022: FY2021-22 till FY2025-26.<\/p>\n<\/li>\n

  2. \n

    Subsequent valuation of investment in such SRs should be strictly in compliance with provisions of MD-TLE.<\/p>\n<\/li>\n<\/ol>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

        On 28-08-2022, Reserve Bank of India (‘RBI') notified that for smooth functioning of the Regional Rural Banks (‘RRBs') and to <\/p>\n","protected":false},"author":67011,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4,1193],"tags":[2958,2611,49987,2732,49988,29478],"class_list":["post-269500","post","type-post","status-publish","format-standard","hentry","category-legislationupdates","category-notifications","tag-Investment","tag-RBI","tag-regional-rural-banks","tag-Reserve_Bank_of_India","tag-rrbs","tag-security-receipts"],"yoast_head":"\nRBI notified provisioning requirement for Investment in Security Receipts in order to provide glide path for the Regional Rural Banks | SCC Times<\/title>\n<meta name=\"description\" content=\"On 28-08-2022, RBI notified that for smooth functioning of the RRBs and to ensure smooth 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