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For private circulation INDEX Sr. No. 01. 02. 03. 04. 05. Particulars From the desk of Branch Chairman Branch Secretary Message Article on Rates of Provisioning of NPA Information & Forthcoming Programs Photographs

June 2011

Page No. 2 3 4 7 8

CA PROFESSION ETHICS & PRIDE

Editorial Board: Chief Editor Chairman Vice Chairman Members : : : : : : : : : CA Harsh Jain, Chairman CA Shailesh jain CA Sanjay Khandwe CA Rajendra Kothari CA Sudhir Dwivedi CA Atish Ostwal CA Jatin Patel CA Sudhir Jain CA Deepak Jain Postal Address:
Bhilai Branch of The Institute of Chartered Accountants of India B.S.P. Primary School, Sector - 3, Bhilai Nagar. Distt. Durg (Chhattisgarh) 490 006 PH e-mail : 0788 2228613 : bhilai_icai@rediffmail.com bhilai.newsletter@gmail.com

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From the desk of Branch Chairman Dear Professional Colleagues, Excellence is not for someone else to notice but for your own satisfaction and excellence
The desire to excel is exclusive of the fact whether someone else appreciates it or not. Excellence is drive from inside ,not outside , excellence is not a singular act but a habit .You are what you repeatedly do. I am again here to be with you through this column . While we should strive for perfection and wealth generation , we should understand that perfection has no limits. society today needs institution that imparts value based and continuous professional education. On 14th of May, we organized Full day Workshop on Service Tax and the speaker was Authority himself CA. Ashok Batra from New Delhi. He dealt with the whole subject wonderfully and also emphasized to come forward for practice in Service tax and other Indirect tax ,as it is immerging out as a great area of professional opportunities. On 28th May, we organized a Study Circle meeting on Income Tax & Corporate Governance. Senior CS from Raipur Shri S.K Batra and our Past Chairman CA. N. K. Taunk along with CA Amit Rai were the speakers . Both the seniors are well known personalities in their fields ,along with them I would specially like to congratulate CA. Amit Rai, Though It was his first deliberation but he dealt with the topic wholly with a professional approach. I would like to request young CAs to come forward as a speaker for study circle, it not only increases self confidence but also makes one perfect in the subject. Coming to our other upcoming Branch Activities, for members and students . On 4th of June Quiz and Elocution contest for CA students will be organized . All members are requested to motivate Articles to participate in the same. On 18th of June we have planned a half day seminar on Income Tax .The faculty is the famous CA from Nagpur Mr. Farouq Haque. For students we have also planned a seminar same day. In addition to above Cricket match for members ,CA day celebration for members and families and Industrial visit, Career counseling program etc for students are the other programs .Details of all the programs are given else where in the News letter . Friends, it is a matter of great pride for our Branch that our Past Chairman CA. Rakesh Dhody and CA . Shrichand Lekhwani have been nominated by CIRC as a co-opted member of Study Circle coordination and Members Grievances committee respectively .. I on behalf of all the members of our branch congratulate them and wish them many more achievements in future also. I welcome new ideas from the members of the Branch. , Your views and suggestions will enable us to serve the Branch, profession members and students in better ways. With warm regards

CA. Harsh Jain Page | 2

Branch Secretary Message "Opportunity may knock only once, but temptation leans on the doorbell." Dear Members, It is a again a immense pleasure to interact with you all through this E-Newsletter. With the support of all of our Branch Members, all the programs for the month was of great success. As we are aware that Students are our future and biggest assets, to enrich their capability and knowledge we have planned to organise Elocution and Quiz contest on 4th of June 2011 at Hotel Tulip Inn.. In addition to above contest a seminar for CA students and a Industrial Visit is also planned during the month. I request all the members to encourage your students and articles to participate in all the above programs. Our CIRC Chairman CA. Vivek Khanna had graced us an opperturnity to host RRC at Pachmadhi jointly with Bilaspur Branch of CIRC. We are thankfull to him for the same and further request all the members of join the RRC at large. I make an appeal to all the members to contribute towards new research and new ideas for the upliftment of our profession as a whole. I request to young members to provide drafts and other value additions to be proposed to be incorporated for study materials and other publications issued by the institutue so that we could join hand with institute efforts to provide updated and quality knowledge to students.I also appeal to contribute articles for our E-Newsletter on regular basis to have more useful contents. We are very fortunate that this year we are going to complete Ten years of establishment of our Branch and we will be celebrating Decennium Celebration this year. I request all the senior memebrs as well as young members to kindly provide value addition ideas for the same.
Will be always in touch with you all either electronically or physically. With warm regards

CA Minesh K. Jain

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Article

RATES OF PROVISIONING FOR RESTRUCTURED ADVANCES REVISED

NPAS

AND

RBI has recentl enhanced Rates of Provisioning for Non-Performing Assets and Restructured Advances. The relevant circular is extracted hereunder :
CIRCULAR NO. DBOD.NO.BP.BC. 94 /21.04.048/2011-12, DATED 18-5-2011

Please refer to paragraph 110 of the Monetary Policy Statement for the year 2011-12 (extract enclosed) wherein it was proposed to enhance the provisioning requirements on certain categories of non-performing advances and restructured advances. Accordingly, the revised provisioning requirements for the following categories of non-performing advances and restructured advances will be as under: (the current provisioning requirements are laid down in paragraph 5 of the Master Circular on Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances - Ref DBOD.No.BP.BC.21/21.04.048/2010-11, dated July 1, 2010). Sub-Standard Advances : 1. Advances classified as "sub-standard" will attract a provision of 15 per cent as against the existing 10 per cent. The "unsecured exposures" classified as sub-standard assets will attract an additional provision of 10 per cent, i.e., a total of 25 per cent as against the existing 20 per cent. However, "unsecured exposures" in respect of Infrastructure loan accounts classified as substandard, in case of which certain safeguards such as escrow accounts are available as indicated in our circular DBOD.No.BP.BC.96/08.12.014/2009-10, dated April 23, 2010, will attract an additional provision of 5 per cent only i.e. a total of 20 per cent as against the existing 15 per cent. Doubtful Advances : 2. Doubtful Advances will continue to attract 100% provision to the extent the advance is not covered by the realisable value of the security to which the bank has a valid recourse and the realisable value is estimated on a realistic basis. However, in respect of the secured portion, following provisioning requirements will be applicable: i. The secured portion of advances which have remained in "doubtful" category up to one year will attract a provision of 25 per cent (as against the existing 20 per cent); ii. The secured portion of advances which have remained in "doubtful" category for more than one year but upto 3 years will attract a provision of 40 per cent (as against the existing 30 per cent); and iii. The secured portion of advances which have remained in "doubtful" category for more than 3 years will continue to attract a provision of 100%. Restructured Advances: 3. i. Restructured accounts classified as standard advances will attract a provision of 2 per cent in the first two years from the date of restructuring. In cases of moratorium on payment of interest/principal after restructuring, such Page | 4

advances will attract a provision of 2 per cent for the period covering moratorium and two years thereafter (as against existing provision of 0.25-1.00 per cent, depending upon the category of advances); and ii. Restructured accounts classified as non-performing advances, when upgraded to standard category will attract a provision of 2 per cent in the first year from the date of upgradation (as against existing provision of 0.25-1.00 per cent, depending upon the category of advances). 4. All other instructions on provisioning will remain unchanged. The revised provisioning norms vis-a-vis the existing norms are also summarized in Annex. Annex
Rates of Provisioning for Non-Performing Assets and Restructured Advances

Category of Advances

Existing Rate (%)

Revised Rate (%)

Sub-standard Advances Secured Exposures Unsecured Exposures Unsecured Exposures in respect of Infrastructure loan accounts where certain safeguards such as escrow accounts are available.

10 20 15
100

15 25 20
100

Doubtful Advances Unsecured Portion Doubtful Advances Secured Portion For Doubtful upto 1 year For Doubtful > 1 year and upto 3 years For Doubtful > 3 years

20 30 100

25 40 100

Loss Advances Restructured accounts classified as standard advances in the first two years from the date of restructuring ; and

100

100

0.25 to 1.00 (depending in cases of moratorium on payment of interest/principal upon the after restructuring period covering moratorium and two category of years thereafter. advance)

Restructured accounts earlier classified as NPA and later 0.25 to 1.00 upgraded to standard category (depending upon the in the first year from the date of up gradation category of advance)

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Extract from the Monetary Policy Statement 2011-12

Enhancement of Rates of Provisioning for Non-Performing Assets

110. In pursuance of the announcement made in the Second Quarter Review of October 2009, banks were advised in December 2009 to achieve a provisioning coverage ratio (PCR) of 70 per cent for their non-performing advances by endSeptember 2010. This coverage ratio was intended to achieve a counter-cyclical objective by ensuring that banks build up a good cushion of provisions to protect them from any macroeconomic shock in future. In April 2011, banks were advised to segregate the surplus of provisions under the PCR vis-a-vis as required as per prudential norms as on September 30, 2010, into an account styled as "counter-cyclical buffer". While the "counter-cyclical buffer" so created would be available to banks for making specific provisions during economic downturns, there is a need for banks to make higher specific provisions also as part of the prudential provisioning framework. Accordingly, It is proposed to enhance the provisioning requirements on certain categories of non-performing advances and restructured advances as under: advances classified as "sub-standard" will attract a provision of 15 per cent as against the existing 10 per cent (the "unsecured exposures" classified as sub-standard assets will attract an additional provision of 10 per cent, i.e., a total of 25 per cent as against the existing 20 per cent); the secured portion of advances which have remained in "doubtful" category up to one year will attract a provision of 25 per cent (as against the existing 20 per cent); the secured portion of advances which have remained in "doubtful" category for more than one year but upto 3 years will attract a provision of 40 per cent (as against the existing 30 per cent); restructured accounts classified as standard advances will attract a provision of 2 per cent in the first 2 years from the date of restructuring, or in cases of moratorium on payment of interest/principal after restructuring, for the period covering moratorium and 2 years thereafter (as against existing provision of 0.25-1.00 per cent, depending upon the category of advances); and restructured accounts classified as non-performing advances, when upgraded to standard category will attract a provision of 2 per cent in the first year from the date of upgradation (as against existing provision of 0.25-1.00 per cent, depending upon the category of advances).

111. Detailed guidelines in this regard will be issued separately.

Compilataion by: CA Minesh Jain

~oo0oo~

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Information

Congratulations: Our Past Chairman CA. Sri Chand Lekhwani has been nominated as Co-opted member of Grievance Committee of CIRC for the year 2011-12. Congratulations to him on behalf of Bhilai Branch of CIRC of ICAI.
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Congratulations Our Past Chairman CA. Rakesh Dhody has been nominated as Co-opted member of Study Circles Co-ordination Committee of CIRC for the year 2011-12. Congratulations to him on behalf of Bhilai Branch of CIRC of ICAI.

Forthcoming Programs:

Sl. No. 1. 2.

Date 04-06-2011 10-06-2011

Program Elocution and Quiz Contest for Students CPE Teleconference Program on XBRL Taxonomies &XBRL Implementation Tools Half Day Seminar on Income Tax Students Seminar on Income Tax Cricket Match with Bhilai Institute of Technology Industrial Visit for CA Students Career Counseling Program for Students CA Day Celebration Flag hosting, blood donation, tree plantation, honor of senior and new CA

3. 4. 5. 6. 7. 8.

18-06-2011 18-06-2011 23-06-2011 25-06-2011 30-06-2011 01-07-2011

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Photographs

PHOTOGRAPH TAKEN DURING FULL DAY WORKSHOP ON SERVICE TAX ON 14.05.2011

Right to Left: Speaker CA. Ashok Batra, CA. Ajay Somani, CA. Harsh Jain & CA. Minesh Jain

PHOTOGRAPH TAKEN DURING FULL DAY WORKSHOP ON SERVICE TAX ON 14.05.2011

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PHOTOGRAPH TAKEN DURING STUDY CIRCLE MEETING ON 23.04.2011

Speaker CA. Rakesh Dhody PHOTOGRAPH TAKEN DURING STUDY CIRCLE MEETING ON 23.04.2011

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PHOTOGRAPH TAKEN DURING STUDY CIRCLE MEETING ON 28.05.2011

Right to Left: Speaker CS S.K. Batra, CA. N.K. Taunk, CA. Harsh Jain, CA Amit Rai & CA. Minesh Jain PHOTOGRAPH TAKEN DURING STUDY CIRCLE MEETING ON 28.05.2011

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