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No collateral for loans up to Rs 5 lakh to SMEs: RBI
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Staff Reporter | 09 Jul, 2008
Stopping short of censuring banks for harassing small and medium enterprise customers, the Reserve Bank on Tuesday asked lenders to follow rules laid down by it for advancing loans to SMEs.
As per RBI guidelines, banks are not supposed to insist on collateral security from SMEs for advances up to Rs 5 lakh but only take into account the viability of their projects while granting loans, the apex bank's Deputy Governor Usha Thorat said at a seminar organised by Indian Banks Association (IBA) in Mumbai.
However, some banks were not adhering to the guidelines and were asking for collateral, she said, adding that in many cases banks had not even analysed their SME portfolios properly.
"For SME loans up to Rs 5 lakh, banks are not supposed to ask for collateral security, but a few banks are insisting on that... very few banks have analysed their own SME portfolios," Thorat said.
SMEs account for nearly 39 percent of country's manufacturing output and more than 34 percent of exports, according to Directorate General of Commercial Intelligence and Statistics' data for 2007.
The Reserve Bank had last year asked leading banks such as State Bank, Indian Overseas Bank, Canara Bank and Indian Bank to conduct a survey in certain districts to ensure whether banks were complying with its norms.
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loan for sme for covering business
S.Ragavan | Sat Nov 5 03:13:35 2011
I would like to start a covering business in a town, am in the field as a producer of covering ornaments for the past 10 years, and as a next phase am interested in incorporate a outlet. the finance required is 5 lakhs. How, When & Where to contact
SME Loan
R.Prabhuram | Wed Jun 22 15:36:45 2011
Sir,
I have started a small industry & machine has not been installed as of today,myself approached for SME loans from Bank of Baroada,Hosur,Tamilnadu,not ready to support without colletral.Kindly request you to help immediately.
My views on Loans up to 5 Lacs to SMe without colateral Security
Suneel Vyasa | Wed Jul 9 06:42:47 2008
This feature is in place for quite a no of years.Isuppose to my knowledge for last 7 years. None of the bank's including Main Bank SBI is willing to entertain this feature. Firstly they are not having any trained menpower to promote such scheme/'s. Their attitude is proactive on NOT DOING SO/ NOT ENTERTAINING SUCH SCHEMES. AS if they are paying from Pocket.
Infact to reasonable extent SME/ Browrrer's are also responcible, because they default on many occassion. { provably most of those get this facility who are approching with specific Malafied interest of not repaying}. Sanctioning officer are held responcible and hence no interest. There should be a mechanism developed which will promote this facility and ensure growth in SME's. I dont mind establishing this mechanism as task takenup for good cause.
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Re: My views on Loans up to 5 Lacs to SMe without colateral Security
Dharmendra Johari | Wed Jul 9 06:56:36 2008
I am 100 % agree with the authors view.There should be a strong mechanism among members banks to ensure effective implement of the scheme.
Local chambers of commerce or other trade organisations may be made responsible for timely realisation of loans provided to SMEs.
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Re: My views on Loans up to 5 Lacs to SMe without colateral Security
NITIN GUPTE | Thu Jul 10 13:12:34 2008
I am fully agree with the opinion of Mr. Suneel Vyasa. No Bank consider any loan application without collateral security. I suggest that the application may be collected through any one agency and send to Banks of that area.
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