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RBI/2016-17/200
FIDD.MSME & NFS.BC.No.20/06.02.31/2016-17
December
29, 2016
All Scheduled Commercial Banks
(Excluding Regional Rural Banks)
Dear Sir / Madam,
Sanction of Additional Working
Capital Limits to Micro and Small Enterprises (MSEs)
Please refer to our circular
FIDD.MSME & NFS.BC.No.60/06.02.31/2015-16 dated August 27, 2015 on
‘Streamlining flow of credit to Micro and Small Enterprises (MSEs) for
facilitating timely and adequate credit flow during their ‘Life Cycle’. In
terms of para 3 (ii) of the above circular, banks were advised, inter alia,
to incorporate with their Boards’ approval, in their lending policy to
MSEs, a clause for fixing a separate additional limit, at the time of
sanction / renewal of working capital limits, specifically for meeting the
temporary increase in working capital requirements arising mainly due to
unforeseen / seasonal increase in demand for products produced by them.
Banks have since confirmed to us having put such a policy in place.
2. Consequent upon withdrawal of
legal tender status of Specified Bank Notes (SBN) of ? 500 and ? 1000
denominations and based on feedback that some MSEs are facing temporary
difficulties in carrying out their normal business due to cash flow
mismatches, it has been decided to review the above instructions.
3. Accordingly, banks are hereby
advised that they may use the facility of providing above ‘additional
working capital limit’ (approved by their boards as above) to their MSE
borrowers, to overcome the difficulties arising out of such cash flow
mismatches also. This would be a onetime measure up to March 31, 2017 and
should thereafter be normalised in fresh working capital assessment cycle.
4. Please acknowledge receipt.
Yours faithfully,
(A. Udgata)
Principal Chief General Manager
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