The Reserve Bank is trying to boost credit flow to the small scale industries (SSIs) and farmers.
The RBI, in its mid-term review of annual policy for the year '04-05, has increased the loan limits to SSI units from Rs 50 lakh to Rs 1 crore.
It has also categorised investments by banks in securitised papers of the SSI sector as priority sector lending.
The central bank has also bought in all private sector banks under the special agricultural credit plans from '05-06. Currently banks extend composite loans to SSIs through a 'single window' system for fixed assets and working capital requirements up to a limit of Rs 50 lakh.
In order to facilitate a smooth flow of credit to SSIs, RBI has proposed to enhance the composite loan limit for SSI entrepreneurs from Rs 50 lakh to Rs 1 crore.
