Highlights of the Seminar organized by SME Chamber of India on 23rd Dec, 2008 at Grand Hyyatt

RBI Guidelines dated 16th December, 2008 issued to Banks regarding parameters of lending:
1. Debtors:
- Credit Days: Can be up to 180 days.
- Margin: 25%

2. Term Loan Moratorium: To be extendable over current level through negotiation.

3. LC Margin: To be reduced by 5-10%.

4. Ad-hoc Credit Limit : 20% of Fund based limit up to 1 year.

5. Additional Credit Limit: 15% of the Current Limit.

6. Restructuring of Loans: Moratorium period of existing Term Loans can be extended on 2 occasions i.e if 1st moratorium extension is not feasible then 2nd extension can be done without affecting the credit worthiness of the unit.

7. Term Loan Amount: Up to 100 Lacs can be sanctioned without collateral for which CGTMSE will give guarantee up to 75% for one time guarantee fee of 1.5% and annual fee of 0.75%

8. Interest Rate: It can be reduced up to 1.5% below PLR. At present SBI is extending loans to SMEs unit below 0.50% of PLR.

9. CLCSS: To replace existing machineries with more modern and efficient ones the Govt will give 15% of such bank credit as subsidy called Credit Linked Capital Subsidy Sceme (CLCSS).

10. ISO 9000/14001: SMEs can get reimbursement of up to 75% of such fess subject to maximum of Rs 75,000 for such certification.

Remark:
1. Dr Amarendra Sahoo-Chief General Manager-RPCD, RBI will be the coordinator between RBI, Banks and SMEs in case any assistance/clarifications.
2. Govt has set up Small Industrial Development Bank of India (SIDBI) for promotion, financing and development of SME sector. SIDBI can provide additional limit of 15% over current credit limit, ad-hoc limit of 15% for 1 year, lower interest rate up to 1.5% below PLR, additional moratorium period for terms loans, bill discounting facilities etc. Hence besides banks the SMEs can directly approach SIDBI for such matters.
3. Govt. has also set up a Performance & Credit Rating Scheme for manufacturing SMEs in April 2005 with the objective of assisting SMEs in obtaining performance-cum-credit rating which would help them in improving performance and also accessing bank credit on better terms if rating is high.
Above are some tangible schemes. There are various other intangible schemes under the Micro, Small and Medium Enterprises Development Act, 2006. Details are available at www.smallindustryindia.com and www.dcmsme.gov.in. Email: dcmsme@dcmsme.gov.in