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COIMBATORE, May 7

BANKS have, keeping in line with the annual policy statement of April 2001, moved over to charging of interest on loans and advances at monthly rests, except on agricultural advances from April 1.

This is in response to the apex bank's instructions for adoption of the 90 days' norm for recognition of loan impairment from the year ending March 2004.

In the case of cash credits and overdraft accounts, the RBI instructions clearly state that `at the time of changing over to monthly rests, the banks may obtain consent letter or supplement agreement from the borrowers for the purpose of documentations'.

It is reliably learnt that banks have started to charge interest at monthly rests on the overdraft and cash credit accounts even without obtaining the consent of the account-holders, although the RBI had instructed the banks to collect the acceptance document. It further said that if the acceptance letter was not forthcoming in spite of sending reminders, `suitable action as deemed necessary could be taken in consultation with the Controlling Authority'.

While cash credit, export packing credit, overdraft account as also agricultural cash credit sanctioned for allied agricultural activities, working capital demand loans rolled over on or after April 2002 are to be charged at monthly intervals, there is to be no change in the instruction on discounting of bills and on agricultural advances.

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