RBI lays down norms on loan system for large borrowers

In respect of borrowers having aggregate fund based working capital limit of Rs150 crore and above, a minimum level of 'loan component' of 40% will be effective from 1 April 2019, said the RBI guidelines

Shayan Ghosh
Updated5 Dec 2018
The guidelines, the RBI said, will be effective from 1 April 2019, covering both existing as well as new relationships. Photo: Mint
The guidelines, the RBI said, will be effective from 1 April 2019, covering both existing as well as new relationships. Photo: Mint

Mumbai: The Reserve Bank of India (RBI) said on Wednesday that borrowers with working capital limit of 150 crore and above will need to have at least 40% of it in working capital loans.

“In respect of borrowers having aggregate fund based working capital limit of 150 crore and above from the banking system, a minimum level of ‘loan component’ of 40% shall be effective from April 1, 2019,” RBI said, adding that the component will increase to 60% from 1 July.

For such borrowers, RBI said, drawings of up to 40% of the total fund-based working capital limits shall only be allowed from the loan component of their total limit. “Drawings in excess of the minimum ‘loan component’ threshold may be allowed in the form of cash credit facility,” it said.

The central bank said the ground rules for sharing of cash credit and loan components may be laid down by the consortium and all lenders shall be individually and jointly responsible to make sure that at the aggregate level, the loan component meets the requirements.

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