Banks Asked to Streamline Lending Policies for MSEs

Mumbai: The Reserve Bank of India on Thursday asked all scheduled commercial lenders to streamline their policies for the MSEs (micro and small enterprises) sector.

"Some banks have not yet put in place Board-approved policy on lending to MSEs, adopting an appropriate system of timely and adequate credit delivery to borrowers in the MSE segment within the broad prudential regulations of RBI," the central bank said in a notification.

It also asked banks to sanction a 'standby credit facility' to fund unforeseen project cost overruns.

"The objective of such 'standby credit facility' would be, among others, to extend credit speedily so that the capital asset creation is not delayed," the RBI said.

The central bank also asked banks to sanction ad-hoc limits, subject to extant prudential norms, to be regularized not later than three months from date of sanction.

Banks are also advised to have a Credit Proposal Tracking System (CPTS) with a view to closely track the application and ensure speedy disposal.

"Banks are advised to review their lending policies to facilitate timely and adequate availability of credit to viable MSE borrowers, especially during the need of funds in unforeseen circumstances," the RBI said.