The RBI had stipulated in the last busy season credit policy that bigger corporates from hence forth should make 25 per cent of their inland purchases from the SSI units through bills. This was well received by the SSI units because of two main reasons. One, it would improve the market share of the product they manufacture. Second, it would ensure at least theoretically that the payments would be made to them according to a time schedule on the due dates of the bills.

Based on the recommendations of the Abid Hussain committee the government had earlier made several sweeping changes like enhancing the investmentceiling in plant and machinery from Rs 60 lakhs to Rs 3 crore. The government had also simultaneously dereserved a number of products reserved exclusively for the SSI sector.

The reduction of investment limit in such a short span of time has resulted in a lot of confusion and the banks are facing some problems in this regard. Only recently they had trouble in compiling data to determine the SSI status of the industrial units during the upward revision of the ceiling limit from Rs 1 crore to 3 crore. No sooner has this task been completed that the revised ceiling has come into effect. According to the available statistics the SSI units contribute significantly towards the growth of the country's economy. By December '96, there were 27.24 lakhs units contributing a total output of Rs 3,56,213 crore, providing employment to 152.6 lakhs persons and accounting for Rs 35,470 crore by way of exports. It could thus be seen that the role played by the SSI sector is already very significant and their market share issubstantial. With the improvement of the quality of their products the figures are bound to increase substantially. Again with the last busy season credit policy directive regarding 25 per cent purchases to be made from the SSI units, their efforts to increase the market share has received a shot in the arm as large units will have to buy more from the SSI units.

Bills financing is one area where the banks are quite comfortable and have a lot of experience. The RBI has been advocating the spread of bills culture and has been committed to do so from the days of new billmarketting scheme and the credit rationing era. During the days of credit rationing era it was more important to the RBI to ensure the end use of funds and the bills finance was encouraged both at the pre sales level by way of drawee bills scheme and at the post sales level.

But it would be better if the RBI initiates measures that would be in tune with the commitment to spread bills culture while ensuring timely payment to the SSI sector.First, it can take up with the government with regards to the bills drawn on the government companies and the departments who as a general rule delay the payments of the bills drawn on them. Second, these government agencies/departments do not as a rule accept hundies when the bills are on DA basis. Third, when the banks request for registration of power of attornies to effect payments for the bills directly to the banks they refuse to do so. Fourth, they invariably hand over the realisation cheques to the parties rather than mailing the same to the banks. Fifth, they almost always insist for drawing only supply bills accompanied by receipted challans. Finally when the goods get rejected they never inform the banks. All these pose problems for the banks who purchase bills for the customers and the RBI would do well if it takes up these issues at the appropriate level. The RBI has stipulated many conditions for the banks regarding servicing of the SSI borrowers like issuance of acknowledgement to the borrowersregarding further date of discussion, provision of timely credit, need to intimate the borrower regarding reason for rejection, taking of decision for rejecting the credit proposal by an authority one rank above the normal sanctioning authority, calling for regular customer meets to sort out problems faced by the borrowers. But the fact is that such formalities are seldom observed by the banks. Though the RBI has been conducting periodical survey to find out how far these directives are adhered to by the banks it has failed to take any follow up action even after knowing that the banks are lax in this regard.

While one appreciates the well meaning directives of the RBI and the government for the benefit of the SSI sector, it should be ensured that they are fully implemented by the banks and others in question. Any practical difficulty should be sorted out as early as possible.