RBI set to finalise special line of credit for Sidbi

Font Size

Print

Feedback

Email

Discuss

• Discount UK Shopping

Related Articles

RBI flashes red signal at MLM companiesRBI for super regulator in fin mktRBI may lower growth forecastRBI steps up firefighting

New Delhi, Nov 10: Reserve Bank of India is expected to meet officials from Small Industries Development Bank of India (Sidbi) this week to finalise a special line of credit worth Rs 10,000 crore. This will enable Sidbi to meet funding demands from the beleaguered micro, small and medium enterprises (MSME) sector in next six months.

RBI would consider the demand at its meeting with Sidbi’s top brass by the end of this week, sources close to the development said. The government is trying to facilitate better flow of funds to various segments of the economy to halt falling growth, which experts say is due to tight liquidity.

There are various options available to RBI to extend this line of credit. “RBI has provisions for discounting of bills and refinancing facility. These options may be studied to decide on the package,” a senior official in the central bank said.

“There is also a possibility of earmarking for Sidbi the funds collected from commercial banks that could not meet the priority sector lending target,” an economic adviser in the MSME ministry said.

Sidbi had demanded the credit line at a meeting with finance minister P Chidambaram last week. “

We have assessed the credit requirement of MSME sector over the next six months and we think that the credit requirement can be met. Sidbi has sought an additional line of credit which will be examined by RBI,” Chidambaram had said after the meeting.

During talks with Chidambaram, Sidbi officials decided to hike the maximum amount a unit can raise from Rs 50 lakh to Rs 1 crore. At present, the institution gives a higher credit to MSMEs on pilot basis, which would be universalised.

Other public sector lenders would also raise the credit limit for MSMEs for all standard accounts. In addition to this, a corporate debt restructuring (CDR) programme was set up for MSME units to enable them pay back the loan even after delay in payment of a few installments.