September 4, 2015
1. Changes in RTGS time window: RBI Vide Notification No: RBI/2015-16/168 dated September 01, 2015 inviting reference to the Reserve Bank of India press release number 2015-2016/528 dated August 28, 2015 on “Bank Holiday on Second & Fourth Saturdays from September 1; RBI to offer its Support Services to Banks on Working Saturdays. Accordingly, RTGS will not be operated on second and fourth Saturdays but would operate for full day on working Saturdays. Processing of future value dated transactions with value date falling on second and fourth Saturdays will not be undertaken under RTGS. The RTGS time window with effect from September 1, 2015 will be as under:
2. Streamlining flow of credit to Micro and Small Enterprises (MSEs) for facilitating timely and adequate credit flow during their ‘Life Cycle’:
Micro and small units are more prone to facing financial difficulties during their life cycle than large enterprises / corporates when the business conditions turn adverse. Absence of timely support at such a juncture could lead to the unit turning sick and many a time irreversibly. As such, role of banks in providing continuous support to viable MSEs during such phases of transient financial difficulties assumes significance.
Accordingly, banks have been advised to put in place Board approved policy on lending to MSEs, adopting an appropriate system of timely and adequate credit delivery to borrowers in the MSE segment within the broad prudential regulations of Reserve Bank of India.
Banks are, therefore, advised to ensure that their lending policies for MSEs are streamlined and made flexible in order to empower the officials concerned to take quick decisions on credit delivery to MSEs. In this connection, banks may consider the following guidelines and tune their existing policies for lending to the MSE sector accordingly:
|S. No.||Time Event||Regular days including Saturdays, except Second and Fourth Saturdays of the Month|
||Open for Business||08:00 hours|
||Initial cut-off (Customer transactions)||16:30 hours|
||Final cut-off (Inter-bank transactions)||19:45 hours|
||IDL Reversal||19:45 hours – 20:00 hours|
||End of Day||20:00 hours|
- Standby Credit Facility: Banks are allowed at the time of sanction of project loans, to sanction a ‘standby credit facility’ to fund unforeseen project cost overruns, if needed. Such ‘standby credit facilities’ are sanctioned at the time of initial financial closure; but disbursed only when there is a cost overrun. Banks may, as part of their lending policy to MSEs, consider a similar approach of providing a ‘standby credit facility’, while funding capital expenditure, to fund unforeseen increases in capital expenditure. Further, at the discretion of banks, such ‘standby credit facility’ may also be sanctioned to fund periodic capital expenditure.
- Working Capital Limits: In terms of extant guidelines, banks are allowed to determine working capital requirements according to their assessment of the borrowers and their credit needs. Banks are required to have a transparent policy and guidelines for credit dispensation, with the approval of their Board, in respect of each broad category of economic activity.
- Review of Regular Working Capital Limits: At present, banks review working capital limits at least once in a year based on audited financial statements. However, audited financial statements of MSE units would ordinarily be available with a time lag, post-closing of the financial year. In such cases and where banks are convinced that changes in the demand pattern of MSE borrowers require a mid-term review, they may do so.
- Timelines for Credit Decisions: Timely credit is critical to the growth of a healthy MSE sector. Towards this Reserve Bank has issued several guidelines. Banks are also required to make suitable disclosures on the timelines for conveying credit decisions through their websites, notice-boards, product literature, etc. In view of the above, banks are hereby advised that above systems should be put in place with immediate effect, with regard to credit facilities for MSE borrowers.