The Reserve Bank of India (RBI) may reduce the period for making provisions for amounts representing excess of debits over credits in inter-branch accounts from three years to two years in the next financial year.
The move has been suggested by the Board for Financial Supervision (BFS) and is currently under examination with the central bank.
The RBI told the joint parliamentary committee probing the recent scam that as per the latest information available, there has been a considerable improvement by the public sector banks in respect of reconciliation of entries.
Amount of outstanding entries came down by 21 per cent to Rs 1,36,299 crore as on September 30, 2000, from Rs 1,72,782 crore as on March 31, 2000.
The amount was as high as Rs 4,77,300 in March 1999 but came down to Rs 3,29,516 crore at the end of September 1999. The number of problem branches too came down from 4,098 as on June 30 1998 to 2,366 as on June 30 1999.
However, the clearing differences (both receivables and payable) in public sector bank for three months rose by 12.74 per cent from Rs 180 crore to Rs 203 crore during the financial year 1999-2000. The number of outstanding entries of public sector banks declined by 28 per cent, while in amount terms it increased 20 per cent during the same financial year.
Earlier, in 1998, the central bank suggested the commercial banks to segregate the credit entries outstanding for more than five years and transfer them to a separate blocked account and show it under other liabilities and make provisions in the balance sheet.
Any adjustment of the blocked account should be permitted only with the authorisation of two officials one of whom should be outside the branch concerned.
