RBI/2018-19/87
DBR.BP.BC.No.12/21.04.048/2018-19
December
5, 2018
All Scheduled Commercial Banks
Small Finance Banks
Dear Sir/ Madam,
Guidelines on Loan System for
Delivery of Bank Credit
Please refer to the Draft Guidelines on the captioned subject
issued on June 11, 2018 for comments of the stakeholders.
2. Taking into account the views
of the stakeholders, the final guidelines are annexed.
Yours faithfully,
(Saurav Sinha)
Chief General Manager in-Charge
Annex
Guidelines on Loan System for
Delivery of Bank Credit
With a view to enhance credit
discipline among the larger borrowers enjoying working capital facility
from the banking system, delivery of bank credit for such borrowers shall
be as under:
1. Minimum level of ‘loan
component’ and Effective date
In respect of borrowers having
aggregate fund based working capital limit of ?1500 million and above from
the banking system, a minimum level of ‘loan component’ of 40 percent shall
be effective from April 1, 2019. Accordingly, for such borrowers, the
outstanding ‘loan component’ (Working Capital Loan) must be equal to at
least 40 percent of the sanctioned fund based working capital limit,
including ad hoc limits and TODs. Hence, for such borrowers, drawings up to
40 percent of the total fund based working capital limits shall only be
allowed from the ‘loan component’. Drawings in excess of the minimum ‘loan
component’ threshold may be allowed in the form of cash credit facility.
Working examples for bifurcation of working capital limit are provided
in Appendix I. The bifurcation of the
working capital limit into loan and cash credit components shall be
effected after excluding the export credit limits (pre-shipment and post-shipment)
and bills limit for inland sales from the working capital limit. Investment
by the bank in the commercial papers issued by the borrower shall form part
of the loan component, provided the investment is sanctioned as part of the
working capital limit.
2. Sharing of Working Capital
Finance
The ground rules for sharing of
cash credit and loan components may be laid down by the consortium,
wherever formed, subject to guidelines on bifurcation as stated in
paragraph 1 above. All lenders in the consortium shall be individually and
jointly responsible to make sure that at the aggregate level, the ‘loan
component’ meets the above mentioned requirements. Under Multiple Banking
Arrangements (MBAs), each bank shall ensure adherence to these guidelines at
individual bank level.
3. Amount and tenor of the loan
The amount and tenor of the loan
component may be fixed by banks in consultation with the borrowers, subject
to the tenor being not less than seven days. Banks may decide to split the
loan component into WCLs with different maturity periods as per the needs
of the borrowers.
4. Repayment/Renewal/Rollover of
Loan Component
Banks/consortia/syndicates will
have the discretion to stipulate repayment of the WCLs in instalments or by
way of a "bullet" repayment, subject to IRAC norms. Banks may
consider rollover of the WCLs at the request of the borrower, subject to
compliance with the extant IRAC norms.
5. Risk weights for undrawn
portion of cash credit limits
Effective from April 1, 2019,
the undrawn portion of cash credit/ overdraft limits sanctioned to the
aforesaid large borrowers, irrespective of whether unconditionally
cancellable or not, shall attract a credit conversion factor of 20 percent.
6. The guidelines will be effective from April 1,
2019 covering both existing as well as new relationships. The 40 percent
loan component will be revised to 60 percent, with effect from July 1,
2019.
Appendix
I
Working
Example for Bifurcation of Working Capital Limits
(After
adjustment as at paragraph 1 of the circular)
(?
in mn)
|
S.
No.
|
Sanctioned
Aggregate Fund based Working Capital Limit
|
Current
Outstanding
|
40%
of column 2 is to be drawn as WCL
|
(1)
|
(2)
|
(3)
|
(4)
|
Scenario 1
|
?2100
|
?780
|
WCL - ?780
CC - Nil
|
Scenario 2
|
?2100
|
?1700
|
WCL - ?840
CC - ?860
|
Scenario 3
|
?2100
|
?1600
|
WCL - ?840
CC - ?760
|
Scenario 4
|
?2100
|
?2000
|
WCL - ?840
CC - ?1160
|
Scenario 5
|
?2100
|
?2050
|
WCL - ?840
CC - ?1210
|
|