Banks Reviewing Dividend Warrant Facility For Firms

Nationalised banks are reviewing the dividend and interest warrant facility offered to corporates following instructions from the Reserve Bank of India asking banks to tighten norms.

The facility is being suspended until the banks complete a case-by-case review of their corporate clients.

A top Bank of India official said: We were the first to issue instructions to our branches to follow the RBI guidelines asking banks to review the facility. Corporates are being asked to furnish the information required by us. If things are found to be in order, we are willing to extend enchashments up to Rs 10,000 per warrant as per the Reserve Bank of India guidelines. But we will withdraw the service for corporates not complying with the requirements.

Bank of Baroda, which will complete its review in a week, is examining the working of the upfront funding mechanism