The board for financial supervision of the Reserve Bank of India has placed five new private sector banks and six old private sector banks under a monthly monitoring system.

The RBI annual report said that the monitoring was essential keeping in view the emerging supervisory concerns.

There are eight new private sector banks in the country and 21 old private sector banks. The new private banks are Bank of Punjab, Centurion Bank, Global Trust Bank, HDFC Bank, ICICI Bank, IDBI Bank, IndusInd Bank and UTI Bank.

The move by BFS would mean that at least one of the institution-backed banks has been placed under monthly monitoring.

However, the name of the bank is not revealed in the report. The four institution-backed banks are HDFC Bank, IDBI Bank, UTI Bank and ICICI Bank.

Under this monitoring, certain key financial parameters of the bank like capital to risk-weighted assets ratio, exposure to sensitive sectors, managerial problems and promoters shareholding are analysed at the end of each month to monitor the progress made by them.

"Supervisory concerns in respect of these banks identified through the analysis of key financial parameters were placed before the BFS every month for its consideration and providing guidance. This exercise has resulted in an improvement in the performance of most of these banks," the RBI said.

The scope of monthly monitoring has been expanded to include the progress in recovery of NPAs.

The RBI had allowed specific relaxation for some of the foreign banks, which had exceeded the revised prudential exposure limits, in respect of merger/acquisition of different borrowing companies.

Foreign banks were brought on a par with Indian banks for computing prudential credit exposure ceiling by redefining capital funds as defined from under capital adequacy standards. This was effective from March 31,2002. The RBI had allowed the excess exposure till March 2004.

The RBI has said that excess exposure on existing fund and non-fund based facilities such as term loans, investments in bonds/debentures and performance guarantees may continue till their expiry/maturity.

Foreign banks have not been allowed to assume fresh exposure to single/group borrowers beyond the prudential credit exposure limits.

Checking for leaks

• The RBI said the monitoring was essential, keeping in view the emerging supervisory concerns.
• Under the monitoring, certain key financial parameters of the bank like capital to risk-weighted assets ratio, exposure to sensitive sectors, managerial problems and promoters shareholding are analysed at the end of each month.
• The scope of monthly monitoring has been expanded to include progress in the recovery of NPAs.