RPCD/PLNFS/No. BC. 89/ 06.04.01/2001-02

29 April 2002

All Scheduled Commercial Banks
(Including RRBs)

Dear Sir,

Rehabilitation of sick SSI units

Please refer to paragraph 77 of the Governor’s Statement on Monetary and Credit Policy enclosed to circular No. MPD.BC.214/07.01.279/2001-02 dated April 29, 2002. Banks are advised to take a pro-active stance in providing timely assistance for rehabilitation of small-scale units, which are affected by the industrial down turn, and delays in payments against supplies made by them to large-scale and other units. In January 2002, following the report of a High Level Working Group, detailed guidelines have been issued to scheduled commercial banks vide our circular RPCD/No.PLNFS/BC.57/06.04.01-2001-02 dated January 16, 2002 for providing timely assistance to potentially viable small scale units. These guidelines, inter-alia, provide for waiving of penal rate of interest to such units, and for extension of working capital at 1.5 percentage points below the prevailing fixed / prime lending rates. Provision has also been made in these guidelines for extension of term loans at reduced rates of interest.

2. Banks are requested to implement these guidelines fully and to submit a report to their Boards by the end of the current calendar year on the progress made in assisting the SSI units under the new guidelines. A copy of the note placed before the Board may please be forwarded to us after its approval.

3. Please acknowledge receipt.

Yours faithfully,

Sd/-
( Verughese John )
General Manager