RBI hikes loan cap to Rs 40 cr for small exporters

September 21
04:56 2019

Aiming to boost credit supply to small exporters, the Reserve Bank Friday enhanced the loan sanctions limit qualifying as priority sector lending by banks to Rs 40 crore per borrower.

The limit was capped at Rs 25 crore per borrower earlier, according to a notification.

It can be noted that the RBI and the government have been taking a slew of measures to spur economic growth, which has dipped to a six-year low by taking slew of measures.

The RBI has also decided to remove the existing criteria of ‘units having turnover of up to Rs 100 crore’ as part of the changes.

The changes have been done “to boost credit to the export sector”, the central bank said in the notification.

Priority sector lending is a mandatory requirement under which lenders are required to devote a portion of their advances to empower focused groups of the economy. All sectors put together, this adds up to 42 percent of the total lending for each bank.

Existing guidelines for domestic scheduled commercial banks to classify ‘incremental export credit over corresponding date of the preceding year, upto 2 percent of adjusted net bank credit or credit equivalent amount of off- balance sheet exposure, whichever is higher’ under PSL will continue to be applicable, the RBI said.

There is no change in the present instructions in respect of foreign banks, it added.Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.

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