Strife-hit loan limit may be raised to Rs 10000

RBI panel moots loan disbursal in calamity-ridden areas sans collaterals.

Taking account of the intensity of losses and inconvenience suffered by customers during the recent calamities, the internal working group constituted by the Reserve Bank of India (RBI) has recommended that banks raise the consumption loan limit from Rs 250 to Rs 10,000 without any collateral in calamity-struck areas.

The working group, under the chairmanship of G Srinivasan (CGM "" rural planning credit department), has suggested that banks be granted discretion to further expand this limit to Rs 25,000.

The reliefs, which could be extended to affected customer categories, may include freezing accounts and lowering interest rates as well as avoiding reporting adverse credit information, said the group in its draft report.

The internal group has also recommended that banks be allowed to defer payments and waive off late fees and penalties related to the non-payment of the dues, in respect of affected credit cardholders, for a period of one to two months.

During tsunami, heavy rains etc, in few regions, a number of instances relating to malfunctioning of ATMs, opening of accounts of small customers, operations of accounts in the absence of documents and failure of computer networks came to the notice of the Reserve Bank, following which the internal group was put in place.

The group further recommended that banks be advised to formulate a full-fledged comprehensive business continuity plan.

This plan, says the draft report, should include allowing banks to open branches on a temporary basis, for 30 days and setting up satellite offices, extension counters or mobile banking facilities.

To ensure a smooth supply of currencies, the group has mooted the idea of alternative arrangements in affected areas, which include opening repositories at post offices and treasuries and facilitating quick opening of bank accounts.

In case of breakdowns experienced by ATM networks, the panel has suggested that customers of one bank must be allowed to access ATM networks of other banks for cash withdrawals, with the former bank bearing the charges.

Moreover, the group recommended measures to increase the daily cash withdrawal limits at ATMs and dispensing cash through mobile ATMs in affected areas.