MUMBAI, March 3: The Reserve Bank of India (RBI) has directed banks to levy penal interest rates on corporates which do not finance 25 per cent of their credit purchases from small-scale industries (SSI) through bills drawn on them. This follows the apex bank's decision in its last credit policy to develop a "bills culture" in the domestic financial system to bail out the SSI from payments crunch.The banks are free to determine the penal interest rates and they have been asked by the RBI to make bill finance one of the covenants for sanction of working capital credit limits, banking sources said. With effect from January 1, RBI has asked banks to monitor compliance by devising a suitable quarterly return to be submitted along with other returns in the information system designed by them.
Loan policy documents of banks should be modified to incorporate these requirements, the apex bank has said. However, banks have not responded"enthusiastically" to the RBI's directives, sources said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
