RBI widens scope of unsecured loans

The RBI tightened the prudential norms for unsecured loans and asked banks to treat the value of all rights, licences and authorisations as unsecured advances and not as tangible securities. Starting April 2009, the RBI has asked banks to disclose the amount of such advances for which intangible securities such as charge over the rights, licences, and authorisations have been taken along with the estimated value of the collateral. Separate disclosures also need to be made in the notes to accounts, the RBI said. The move would result in higher risk weight and increase the provisioning requirement for banks.