Page 187 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes 4. No service charges/inspection charges to be levied on PS advances up to Rs. 25000 and for
loans above Rs. _____ banks are free to levy service charges.
5. _______ activities such as leasing and hire purchase financing undertaken departmentally
by banks will be classified as priority sector advances, provided the ultimate beneficiary
satisfies the criteria laid down by RBI for treating such advances to PS.

9.4 KVI Sector

All advances to KVI sector, irrespective of their size of operations, location and investment in
plant and machinery, will be covered under priority sector advances and will also be eligible for
consideration under the sub-target (60 percent) of the SSI segment within the priority sector.
Other units recognized as SSIs:
Manufacture of common salt through any process including manual operation (involving
solar evaporation) may be considered as an industrial activity and credit provided by
banks to units engaged in the manufacture of common salt which satisfy the norms of SSI
unit may be classified under advances to SSI.
Units engaged in ship breaking/dismantling are composite ones which also undertake
the processing of scrap thus obtained and hence the entire activity can be covered under
processing. Therefore, all small scale industrial units with original cost of plant and
machinery not exceeding Rs. 1 crore and engaged in ship breaking/dismantling activity
may be considered as small scale industrial undertaking and bank advances to such units
reckoned as priority sector advances.

Bank loans to bought leaf factories manufacturing tea are to be reckoned as priority sector
lending to small scale industry, provided the investment in plant and machinery (original
cost) does not exceed the prescribed limits.
Water mills (Gharat) have been recognized as an industrial activity and shall be eligible
for registration as small scale industry.
9.5 Lines of Credit

Banks may consider on merit, proposals received from State Industrial Development
Corporations (SIDCs) and State Financial Corporations (SFCs) for sanction of term finance/
loans in the form of lines of credit.
Such term finance/loans to the extent granted for/to the Small Scale Industrial (SSI) units, will
be treated as priority sector lending, subject to the observance of following conditions:

1. SFC/SIDC should maintain separate and distinct accounts of fresh disbursements made to
SSI units and outstanding amounts there against.
2. Periodical statements to be obtained from SFC/SIDC to monitor the position.

3. Annually, a certificate issued by SFC/SIDC statutory auditors certifying that the outstanding
borrowings from banks were fully covered by the non-overdue loans outstanding in
respect of fresh disbursements made to SSI units from out of term finance/lines of credit
granted by banks.

4. The rate of interest to be charged by banks on such term finance/loans/lines of credit will
be in conformity with the directives on interest rates issued by the Reserve Bank from
time to time.

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