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AS you are aware, several parts of the country have been affected by drought and floods resulting in damage to crop and property. Thus begins a recent notification from the RBI addressed to all scheduled commercial banks. It advises banks to assess the situation and take immediate measures to provide appropriate relief to the affected persons.

No new guidelines have been drawn for the age-old problem of drought, but a reference has been drawn to the existing circular letter RPCD.NO. PS.BC.6/PS.126-84 dated August 2, 1984. That had detailed guidelines for providing relief to the affected persons without waiting for separate instructions from the RBI each time.

In 1998, these were modified (through circular RPCD.NO.PLFS.BC.128 / 05.04.02 /97-98 dated June 20), delegating more powers and discretion to banks in relation to operational aspects and in deciding upon the quantum of relief assistance to be provided to the affected farmers in respect of agricultural advances.

The central bank would be glad if the banks took immediate action in terms of the standing guidelines in providing appropriate relief to the persons affected by natural calamities. There could be a dearth of rainfall, not of notifications or circulars. (Notification No RPCD NO PLFS BC/2/05.04.02 /2002-2003 dated August 3, 2002)

Donation watch

There is another missive from the RBI on donations. About two years back, the central bank had advised banks (through its circular DBOD No. Dir. BC. 1 / 13.01.10 / 2000) that they could make donations during a financial year, aggregating up to 1 per cent of their published profit for the previous year. On a review, the RBI has decided to exempt from the ceiling donations made by banks to the Prime Minister's Relief Fund. However, the proposal for donation to the PM's Relief Fund should have the approval of the board of the bank, and the amount of the donation should be `reasonable' as compared to the published profit of the bank for the previous year.

This has been done in view of representations from IBA and banks, that, at times, the banks find the above ceiling inadequate to contribute to relief measures for people affected by natural calamities and other disaster. This relaxation does not apply to loss-making banks; for them the overall limit on donations is Rs 5 lakh.

The RBI has also stipulated that banks' boards should lay down their donation policy and that donations should not be linked to the deposit mobilisation. Also, no bank can carry forward the unutilised amount of the permissible limit of any year for use in subsequent years. Please acknowledge receipt, concludes the notification. Hopefully, the banks also collect receipts for the donations they make. (Notification No DBOD No Dir BC 15/13.01.01/2002-03 dated August 6, 2002)

Difficulty removal

The Ministry of Finance and Company Affairs has issued a queerly named order called the Service Tax (Removal of Difficulty) Order, 2002.

It seeks to define "agricultural produce" for the purpose of clause (87) of section 65 of the Finance Act, 1994.

It means any produce resulting from cultivation or plantation, on which either no further processing is done or such processing is done by the cultivator like tending, pruning, cutting, harvesting, drying which does not alter its essential characteristics but make it only marketable and includes all cereals, pulses, fruits, nuts and vegetables, spices, copra, sugar cane, jaggery, raw vegetable fibres such as cotton, flax, jute, and so on, indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea but does not include manufactured products such as sugar, edible oils, processed food, processed tobacco. Any difficulty? (Order No 1/2002 dated August 1, 2002)

E-money

European Central Bank defines this as "an electronic store of monetary value on a technical device ... used for making payments to undertakings other than the issuer without necessarily involving bank accounts in the transaction, but acting as a prepaid bearer instrument." (Cited in Report of the RBI Working Group on Electronic Money)

— D.M.

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