Regulator asks commercial banks not to withhold approved credit

October 13th, 2008 - 9:07 pm ICT by IANS  

New Delhi, Oct 13 (IANS) The Reserve Bank of India (RBI) Monday asked commercial banks not to withhold credit to corporate India that had already been sanctioned and approved, saying prudent lending norms may be followed after the improvement in liquidity.“In view of the improved liquidity in the markets, the banks concerned are advised to review all such cases and permit drawal of sanctioned limits, guided by their usual commercial judgment,” said a senior central bank official in a statement.

He said some commercial banks were averse to disbursing working capital limits and term loans to their clients against the sanctioned limits even in cases where the drawing power was available.

“The banks concerned are, therefore, also advised to consider restructuring the dues of the SMEs (small and medium enterprises), under the guidelines, on merits of the case,” he added.

The official said even though the steps were taken in view of the tight liquidity conditions, the situation had since changed. His reference was to the cut of 150 basis points in the past week in the cash reserve ratio, or the minimum balance that banks had to retain against deposits.

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