MODIFICATION OF LOAN SYSTEMS IN LARGE COMPANIES

BE/RBI NOTE/20/2018

The Reserve Bank of India on Monday came out with draft guidelines on Loan System for delivery of Bank Credit to improve discipline among larger borrowers who enjoy working capital facility from the entire banking system.  The salient features of the draft guidelines are:

  1. A minimum level of LOAN COMPONENT in fund based working capital finance.
  2. A Mandatory Credit Conversion Factor (CCF) for the undrawn portion of cash credit/overdraft limits availed by large borrowers.
  3. Effective from October 1, 2018, a minimum of 40% of the aggregate fund based working capital limit of borrowers enjoying Rs. 150 crore or more limits shall be availed in the form of Loan Component.
  4. That is to say that for such borrowers, the outstanding loan component of the total component must be equal to at least 40% of the sanctioned fund based working capital limit, including adhoc credit facilities.

 

Author: Admin Bankedge

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