Review of Circulars Issued on Writing-off of Bad Debts/Losses, Compromise Proposals – Delegation of Powers

RBI 2012-13/357

DBOD.No.BP.BC- 68/21.04.048/2012-13

January 1, 2013

The Chairman and Managing Director/Chief Executive Officer of

All Scheduled Commercial Banks in

Private Sector (excluding Foreign Banks)

Dear Sir,

Please refer to our circular DBOD.No.BC.148/16.13.100/93 dated August 13, 1993 and DBOD.No.Fol.BC.70/C.581/89 dated February 8, 1989 on the captioned subject.

2. On a review, it has been decided to withdraw the abovementioned circulars. Banksmay, however, continue tobe guided by the guidelines contained in our circular DBOD.No.BP.BC.81/21.01.040/95 dated July 28, 1995 and other relevant instructions in this regard. They may accordingly frame their own policy on writing-off of bad debts and compromise settlements, with the approval of Board of Directors.

Yours faithfully,

(Deepak Singhal)

Chief General Manager-in-Charge

Write off delegation: private banks may frame board approved bad debt write-off and compromise policies under existing guidelines. Two earlier circulars on writing-off bad debts and compromise settlements are withdrawn, but banks must continue to follow the 1995 guidelines and other relevant instructions. Private sector banks may frame their own write-off and compromise policies provided these policies obtain Board approval and remain consistent with the extant supervisory guidance.