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Credit to new MSME borrowers—RBI initiative

The Reserve Bank of India (RBI) in terms of Statement on Developmental and Regulatory Policies of 5 February 2021, announced that Scheduled Commercial Banks will be allowed to deduct the amount equivalent to credit disbursed to ‘New MSME borrowers’ from their Net Demand and Time Liabilities (NDTL) for calculation of the Cash Reserve Ratio (CRR). For the purpose of this exemption, ‘New MSME borrowers’ shall be defined as those MSME borrowers who have not availed any credit facilities from the banking system as on 1 January 2021.

This exemption will be available only up to ₹25 lakh per borrower disbursed up to the fortnight ending 1 October 2021, for a period of one year from the date of origination of the loan or the tenure of the loan, whichever is earlier.

Click here to view the Circular

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