 | The composite loan scheme of SIDBI and commercial banks is designed to
ease operational difficulties of the small borrowers by providing term loan and working
capital through a single window. The limit for composite loans is currently Rs.2 lakh. I
propose to increase this limit to Rs.5 lakh. |
| To simplify the computation of working capital limits of SSI units, last
year I had announced that for SSI units having an aggregate turn over of Rs.4 crore,
working capital limit would be fixed at 20% of the annual turnover. I propose to increase
this limit to Rs.5 crore. |
| In line with the recommendations of a high powered committee appointed by
it, RBI had advised banks to delegate more powers to branch managers to grant ad hoc
limits, to simplify application forms, to fix their own norms for assessment of credit
requirement and open more SSI branches. These measures should ease the flow of bank credit
to SSI units. |
| To increase the outreach of banks to the tiny sector, lending by banks to
non banking finance companies or other financial intermediaries for purposes of on-lending
to the tiny sector is being included within the definition of priority sector for bank
lending. |
| Inability to provide adequate security to banks and low recovery are
often cited as a major constraint in flow of investment credit to SSI units. The problem
is more acute for export oriented and tiny sector enterprises. To alleviate this problem,
a new credit insurance scheme will be launched. |
