PRUDENTIAL NORMS FOR OFF-BALANCE
SHEET EXPOSURES OF BANKS – DEFERMENT OF OPTION PREMIUM
Notification No.:-RBI/2012-13/535
Dated:-18/06/2013
Dated:-18/06/2013
i.
Banks should carry out necessary due
diligence with regard to the ability of users to adhere to the premium payment
schedule, in accordance with their Board approved policy in this regard, before
extending this facility to the users.
ii.
Payment of premium for option structure
with maturity of more than 1-year may be deferred, provided the premium payment
period does not extend beyond the maturity date of the contract.
iii.
The premium should be received
uniformly over the maturity of the contract and the periodicity of such payment
should be at least once in a quarter.
iv.
This facility should not be allowed for
the contracts which are on past performance basis.
·
Suitability and appropriateness as
regards structured
derivative products laid
down in ‘Comprehensive Guidelines on Derivatives: Modifications’ dated November
2, 2011 issued by Department of Banking Operations and Development, RBI; and
· Cost Reduction Structures as laid down
in Master Circular on ‘Risk Management and Inter-Bank Dealings’ dated July 2,
2012 issued by Foreign Exchange Department, RBI.
Regards
CA. Mona Singhal
Partner
Arpit Gupta & Associates
Chartered Accountants
701, Nirmal Tower,
26, Barakhamba Road,
Connaught Place, Delhi-110001
Mobile:- +91-9873082769
Website: www.caaga.co.in
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