CHENNAI, Nov 2: With a view to providing focused attention and increased flow of credit to the SSI sector, the Reserve Bank of India (RBI) has asked banks to adhere to the prescribed time schedule for the disposal of loan applications.

In a letter from RBI to the National Confederation of Small Industry (Nacosi, RM Joshi General Manager RBI, briefed on the measures that RBI was planning, to tone up bank financing of SSIs. The letter was in response to Nacosi president MS Parthasarathy's appeal on behalf of small-scale industries that they needed assistance from banks in a time-bound manner to avoid sickness.

The letter states that that loan applications would be attended to in two weeks time for amounts up to Rs 25,000 and eight to nine weeks for loans above Rs 25,000.

The banks would also look into the modalities for taking credit decision quickly and put in place monitoring mechanism to ensure quick decisions. Decisions on loan proposals would be communicated promptly to SSI units.

RBI would ensure that specialised SSI branches set up by banks would have appropriate personnel who will have discretionary powers to sanction credit.

Appropriate training programmes would be chalked out to inculcate attitudinal change in the mindset of staff to bring about perceptible improvement in the functioning of specialised branches.

Banks would reactivate grievance redressal machinery at the controlling offices to improve customer relations and customer satisfaction.

RBI would also monitor performance of banks on an ongoing basis and take corrective steps wherever required.

The procedure for computing the working capital requirements of SSI units has been simplified. Banks were asked in April 1993 to compute working capital requirements of SSI units enjoying aggregate fund-based working capital credit limits up to Rs 50 lakh from the banking system, on the basis of a minimum of 20 per cent of the projected annual turnover instead of adopting Tandon Committee norms.

This was made applicable to SSI units having working capital limits up to Rs 2 crore from the banking system.

In other words SSI units with a turnover of Rs 10 crore can availworking capital limits of up to Rs 2 crore from the banking system. Banks have also been advised to provide four-fifth of their working capital needs and the remaining has to be brought in by the borrower towards his contribution.

The appliaction forms as well as the procedure for borrowing for SSI units have been simplified and streamlined.

Banks have been advised to render assistance to small borrowers in completing banks' requirements and to give preference to village industries, tiny industries and small scale industries in that order while meeting the credit requirements of the SSI sector.

Banks have been asked to ensure that out of the funds available to all segments of SSI sector, 40 per cent is made available to units with investments in plant and machinery up to Rs 5 lakh, 20 per cent to units with investments between Rs 5 lakh and Rs 25 lakh and the remaining 40 per cent for the other SSI units.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.