June 12, 2018
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Loan component requirement mandates minimum loan portion of working capital for large borrowers, changing drawing and risk treatment.
Banks must ensure that borrowers with aggregate fund based working capital limits at or above the specified threshold maintain a minimum loan component equal to 40% of sanctioned fund based working capital limits from October 1, 2018; drawings up to that level shall be drawn from the loan component while excess may be cash credit. Lenders in consortiums are jointly and severally responsible for aggregate compliance and, under Multiple Banking Arrangements, each bank must comply individually. The undrawn portion of cash credit/overdraft limits will attract a credit conversion factor from April 1, 2019, and the loan component requirement is proposed to rise to 60% from that date.