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RBI raises loan sanctions limit to Rs 40 crore for small exporters

23 Sep 2019 Evaluate

In order to improve credit supply to small exporters, the Reserve Bank of India (RBI) has raised the loan sanctions limit qualifying as priority sector lending by banks to Rs 40 crore per borrower. The previous limit was set at Rs 25 crore per borrower. The RBI and the government have been taking a slew of measures to spur economic growth, which has dipped to a six-year low.

The central bank has also decided to remove the existing criteria of 'units having turnover of up to Rs 100 crore' as part of the changes. The changes have been done to boost credit to the export sector. Priority sector lending is a mandatory requirement under which lenders are required to devote a portion of their advances to empower focused groups of the economy. All sectors put together, this adds up to 42 percent of the total lending for each bank.

The RBI said existing guidelines for domestic scheduled commercial banks to classify 'incremental export credit over corresponding date of the preceding year, upto 2 percent of adjusted net bank credit or credit equivalent amount of off- balance sheet exposure, whichever is higher' under PSL will continue to be applicable. There is no change in the present instructions in respect of foreign banks.

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