Reserve Bank of India (RBI) received request from some banks to give concessions on the prudential guidelines owing to unfavourable liquidity condition in the banking system.

One of the concessions sought by banks is the waiver of the additional 75 basis points provisioning on restructured loans.

RBI has said that any project which has a time overrun of one year and within that period if the loan is restructured and remains standard, then it will continue to be standard. Banks want the RBI to extend the definition of restructured assets to cover loans that came up for restructuring in 2010 and 2011.

Further, banks want the RBI to allow daily borrowings under the Liquidity Adjustment Facility window on Saturday also “because everybody keeps excess cash, which is wasted”.  

RBI was also requested to allow banks switch their bond holdings from the available-for-sale (AFS) category to the held-to-maturity (HTM) category to avoid mark-to-market losses caused by the recent surge in bond yields following the apex bank’s moves to stabilise the rupee.

Bankers have asked the RBI to increase the amount of securities that banks can hold in the HTM category.  Bankers said that “if the liquidity tightening measures are in place for more than two months, we want some respite.”