Page 190 - DMGT303_BANKING_AND_INSURANCE

Unit 9: Priority Sector Lending

(ii) Funded Interest Term Loan Interest Free. Notes
(iii) Working Capital Term Loan Interest to be charged 1.5% below the prevailing fixed/
prime lending rate, wherever applicable.

(iv) Term Loan Concessions in the interest to be given not more than 2% (not more than 3% in
the case of tiny/decentralized sector units) below the document rate.
(v) Contingency Loan Assistance the Concessional rate allowed for Working Capital
Assistance.

Notes As per the revised definition, a unit is considered as sick when any of the borrowal
account of the unit remains substandard for more than 6 months or there is erosion in the
net worth due to accumulated cash losses to the extent of 50% of its net worth during the
previous accounting year and the unit has been in commercial production for at least two
years.

Did u know? Broad parameters for grant of relief and concessions is Interest on Working
Capital Interest 1.5% below the prevailing fixed/prime lending rate, wherever applicable.

Self Assessment

State whether the following statements are true or false:
6. Funds provided by commercial banks to SIDBI by way of rediscounting of bills which are
originally discounted by a commercial bank and rediscounted by SIDBI will not be eligible
for inclusion under the priority sector as indirect finance to SSI.
7. Banks have been advised not to fix sub-limits within the overall working capital limits to
the large borrowers specifically for meeting the payment obligation in respect of purchases
from SSI.
8. A register should be maintained at branch wherein the date of receipt, sanction/rejection/
disbursement with reasons therefore etc., should be recorded.
9. A composite loan limit of Rs.1 crore can be sanctioned by banks to enable the SSI
entrepreneurs to avail of their working capital and term loan requirement through Single
Window.
10. Rejection of applications for fresh limits/enhancement of existing limits should be done
without the approval of the next higher authority.

9.8 State Level Inter Institutional Committee (SLIIC)

In order to deal with the problems of coordination for rehabilitation of sick small scale units,
State Level Inter-Institutional Committees (SLIICs) have been set up in all the States. The meetings
of these Committees are convened by Regional Offices of RBI and presided over by the Secretary,
Industry of the concerned State Government. It provides a useful forum for adequate interfacing
between the State Government Officials and State Level Institutions on the one side and the term
lending institutions and banks on the other. It closely monitors timely sanction of working
capital to units which have been provided term loans by SFCs, implementation of special
schemes such as Margin Money Scheme of State Government, National Equity Fund Scheme of
SIDBI, and reviews general problems faced by industries and sickness in SSI sector based on the

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