All Schedled Commercial Banks

Dear Sir,

In terms of paragraph 5 of our circular letter DBOD.NO.CAS.BC.64/C.446(SIU)-78 dated 12 May 1978, banks were advised to apprise their Board of Directors, of the position of lendings to small-scale sector, by submitting a comprehensive memorandum on a quarterly basis, indicating regionwise and industrywise classification of credit facilities granted to small-scale industries, the organisational arrangements made for monitoring and counselling, the extent of sickness (number of units, amounts involved), the cause of sickness, corrective measures taken and the results achieved, etc. Banks are required to forward to RBI a copy of the memorandum for our information. It is observed that your bank has not been forwarding a copy thereof to RBI regularly.

2. Further in terms of item 6 of our circular letter RPCD.No.PLNFS.BC.6/PS.72/88 dated 30 July 1988, banks are required to put up separate half yearly reports to their Boards of Directors reviewing the position of applications for financial assistance from the SSI sector, assistance granted to the SSI sector, comprehensively covering, among others, the overall progress, statewise and industrywise details position of sick units and follow up action taken, complaints and grievances, redressal, delays in sanction, etc.

3. We shall be glad if the memorandum and the report referred to at paragraphs 1 and 2 above are prepared at least on a half yearly basis, i.e. as at end of March and September each year and placed before the Board and copies thereof are regularly sent to us. The copies of such memoranda and reports for the half year ended September 1991 may please be sent to us immediately on receipt of this circular letter.

4. Please acknowledge receipt.

Yours faithfully,

Sd/-

Joint Chief Officer

All Scheduled Commercial Banks

Dear Sir,

Please refer to paragraph 1 of our circular RPCD.No.PLNFS.BC.76/PS-72-88/89 dated 25 February 1989 advising that if an industrial undertaking/proprietor/partner sets up two or more units within the same State or outside, whether manufacturing similar or different items, the fixed investment in plant and machinery of all such units is to be clubbed together for determining the SSI status of the unit.

2. Government of India, in their policy measures for promoting and strengthening small, tiny and villages enterprises, laid on Table of both the Houses of Parliament on 6 August 1991, decided to allow equity participation by other industrial undertaking in small scale sector, not exceeding 24 percent of the total share holdings of the SSI unit. Since the existing guidelines on clubbing of investment in plant and machinery of one or more units set up by common proprietor/partner(s)/ Diretor(s)/within the country for manufacturing similar/different products for deciding SSI status of the units do not conform with the new policy of Government, which allows equity participation by other industrial undertakings in the SSI, it has been decided by Government of India, to keep operation of the instructions of clubbing of investments referred to above, in abeyance till further orders.

3. We shall be glad if you will please issue suitable instructions to your branches/controlling offices to implement the decision of Government of India, mentioned in paragraph 2 above.

Yours faithfully,

Sd/-

Joint Chief Officer

All Scheduled Commercial Banks
(excluding Regional Rural Banks)
Dear Sir,

Please refer to our circular RPCD.No.PLNFS.BC.20/PS.72-85/86 dated 8 October 1985 on the above subject. As you are aware, Government of India, vide their notification No.S.O.232(E) dated 2 April, 1991, published in Part-II Section 3-Sub-section (2) of the Gazette of India, Extraordinary, dated 2 April 1991 (copy enclosed), have revised the requirements to be complied with by an industrial undertaking for being regarded as small scale industrial undertaking and ancillary industrial undertaking, by enhancing the limit for investments in plant and machinery. In this connection we advise that till further instructions are issued in the matter, SSI classification under priority sector should be given only in respect of those units whose investment in plant and machinery does not exceed Rs.35 lakhs (Rs.45 lakhs in the case of ancillary undertaking). However, there is no objection to the banks financing units with investments in plant and machinery exceeding the aforesaid limits. Such lendings, however, will be outside the purview of priority sector. Further, if SIDBI refinance is available in respect of loans to such industrial undertakings, banks can avail of the same.

2. We also advise that in respect of rehabilitation of SSI units, banks may follow the revised definition as given by Government of India, viz. the investment in plant and machinery should not exceed Rs.60 lakhs in the case of SSI units and Rs.75 lakhs for ancillary undertakings, and the export oriented units, provided the export oriented units undertake to export atleast 30 per cent of the annual production by the end of third year from the date of their commencing production.

3. Please acknowledge receipt.

Yours faithfully,

Sd/-

Joint Chief Officer

(Department of Industrial Development)

New Delhi

2nd April, 1991

S.O.232(E) - Whereas the Central Government considers it necessary with a view to ascertain which ancillary and small scale industrial undertakings need supportive measures, exemption of other favourable treatment under the Industries (Development and Regulation) Act, 1951 (65 of 1951) (hereinafter referred to as the said Act) to enable them to maintain their viability and strength so as to be effective in-a) promoting in a harmonious manner the industrial economy of the country and easing the problem of unemployment, and b) securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good.

And whereas the draft notification was laid before each House of Parliament for a period of 30 days as required under sub-section (3) of section 11B of the said Act.

And whereas no modification in the proposed notification has been suggested by both Houses of Parliament.

Now, therefore, in exercise of the powers conferred by sub-section (1) of Section 11B and subsection (1) of Section 29B of the said Act, and notwithstanding anything contained in any earlier notification issued by this Department the Central Government hereby specifies having regard to the factors mentioned in sub-section (2) of the said Section 11B, the requirements mentioned in the Table below, which shall be complied with by the industrial undertakings to enable them to be regarded, as an ancillary, or a small scale industrial undertaking for the purpose of the said Act.

1. Requirements to be complied with by an industrial undertaking for being regarded as small scale industrial undertaking :-

a) An industrial undertaking in which the investment in fixed assets in plant and machinery whether held on ownership terms or on lease or by hire purchase does not exceed rupees sixty lakhs.

b) In case of an industrial undertaking referred to in (a) above the limit of investment in fixed assets in plant and machinery shall be rupees seventy five lakhs provided the unit undertakes to export atleast 30 per cent of the annual production by the end of 3rd year from the date of its commencing production.

II. Requirements to be complied with by an industrial undertaking for being regarded as an ancillary industrial undertaking :An industrial undertaking which is engaged or is proposed to be engaged in the manufacture or production of parts, components, sub-assemblies, tooling or intermediates, or the rendering of services, and the undertaking supplies or renders or proposes to supply of tender not more than 50 percent of its production or services, as the case may be, to one or more other industrial undertakings and whose investment in fixed assets in plant and machinery whether held on ownership terms or on lease or on hire purchase, does not exceed rupees seventy five lakhs.

Note : No small scale or ancillary industrial undertaking referred to above shall be subsidiary of or owned or controlled by any other industrial undertaking.

2. Every industrial undertaking which has been issued a certificate of registration by the Department of Industrial Development or Director General of Technical Development under the said Act and now falls within the above definition of ancillary of small scale industrial undertaking may be registered, at the discretion of the owner, as such, within six months from the date of issue of this notification.

3. This Notification shall come into force on the date of its publication in the official Gazette.

All Scheduled Commercial Banks

Dear Sir,

Please refer to our circulars DBOD.No.BP.BC.169/C.464(A)-78 and BP.BC.22/C.464(A)-81 dated 12 December 1978 and 14 February 1981 respectively regarding tiny units. Govt. of India (in their policy measures for promoting and strengthening small, tiny and village enterprises laid on the Table of both the Houses of Parliament on 6 August 1991), have since decided to increase the investment limits in plant and machinery of Tiny Enterprises from the present Rs.2 lakhs to Rs.5 lakhs, irrespective of location of the unit.

2. Accordingly the status of Tiny Enterprise may be given to all small scale units, whose investment in plant and machinery is upto Rs.5 lakhs, irrespective of the population limit. A copy of circular letter No.2(3)/91-SSI. Bd. dated 16 August 1991 issued in this connection by the office of the Development Commissioner (SSI), Ministry of Industry (Deptt. of Small Scale Industries and Agro Rural Industries), Govt. of India, New Delhi is enclosed for your information.

3. We shall be glad if you will please issue suitable instructions to your branches/controlling offices.

Yours faithfully,

Sd/-

Joint Chief Officer

16th Aug. 91

Secretary Industries,

Commissioner/Director of Industries, All states and Union Territories

Dear Sir,

Kindly refer to para 2.1 of the Policy Measures for promoting and strengthening small, Tiny and Village Enterprises, laid on the Table of both the Houses of the Parliament on 6th August, 1991 which reads as under :

Government have already announced increase in the investment limits in plant and machinery of small scale industries, ancillary units and export-oriented units to Rs.60 lakhs, 75 lakhs and 75 lakhs respectively. Such limits in respect of TINY ENTERPRISES would now be increased from the present Rs.2 lakhs to Rs.5 lakhs, irrespective of location of the unit.

You are requested to accord status of Tiny Enterprise to all small scale units whose investment in plant and machinery is upto Rs. 5 lakhs irrespective of the population limit. In other words there is no restriction in registering Tiny Enterprises having investment in plant and machinery upto Rs.5 lakhs in any part of the country. Since all tiny units are also small scale units, registration No. to units with investment upto Rs. 5 lakhs will be given in the same way as is done in the case of small scale industries. The units in which investment is less than Rs. 5 lakhs in plant and machinery, the Registering Authority will make an endorsement on the certificate to the following effect : The units is a tiny enterprise and its status as Tiny is valid upto ________ (date)

Seal with signature of
(Registering Authority)

The endorsement will be under the seal and signature of the Registering Authority and will be valid upto 5 years. If, after 5 years the unit continues to be a tiny unit, its status after verification, can be revalidated as Tiny for another 5 years and so on. Those who do not turn up for revalidation within 3 months (prior) of the validity period, will cease to be tiny enterprise after expiry of original validation period. DIC s should maintain a record of number of units which have been accorded the status of Tiny Units, alongwith their validity period.

Government have decided that Industry related service/Business Enterprises with investment upto Rs.5 lakhs in fixed assets, excluding land and building, will be eligible for the same benefits which are available to the tiny units and these can be registered as Small Scale Service/Business Enterpirses (SSSBE) by the DICs. The units can be set up in any village/town irrespective of its population. This office has vide Ministry s letter No.SSI(I)-12(14)/82 dated 18.5.82 had clarified on the types of activities to be covered in the category of Small Scale Service Establishments/Enterprises with investment upto Rs.2 lakhs etc. It has now been decided to issue a revised illustrated list of activities covered under Small Scale Service/Business Enterprises . The list will follow, alongwith detailed instructions. Registration of SSSBE s may await the receipt of such instructions.

Yours faithfully,

Sd/-

Director (SSI Bd.)

All Scheduled Commercial Banks

Please refer to our circular RPCD.No.PS.BC.1/C.464(A)-82 dated 1 September 1982 advising that advances to Small Scale Service Establishments (SSSE) having investment in plant and machinary in each case not exceeding Rs. 2 lakhs and which are located in rural areas and towns with a population of one lakh or less, would be entitled to the same concessions and incentives as small scale industries and ancillary industries, as per the definition contained in our circular DBOD.No.BP.BC.22/C.464(A)-81 dated 14 February 1981.

2. As a follow-up action to policy measures of promoting and strengthening small, Tiny and village Enterprises, the Government of India have recently decided to extend the benefits of the small-scale sector to all Industry related Service and Business Enterprises with investment upto Rs. 5 lakhs in fixed assets, excluding land and building. The units can be set up in any village/town irrespective of its population. For computation of fixed assets the original price paid by the original owner will be considered irrespective of price paid by the subsequent owner. Further, from now onwards only industry related Small Scale Service/Business Enterprises (SSSBEs) having investment in fixed assets excluding land and building upto Rs.5 lakhs will be eligible for benefits/concessions available to industries in small-scale sector. Government have, however, advised that units which have been registered as SSI or SSSE Prior to issue of the Government instruction as above shall continue to get assistance as per the existing registration and these cases need not be re-opened for deregistration.

3. A copy each of circular No.2(3)/91-SSI-Bd. dated 30 September 1991 and certain modification vide circular dated 3 January 1992 issued in this connection by the office of the Development Commissioner (SSI), Ministry of Industry (Department of Small Scale Industries and Agro Rural Industries), Government of India, New Delhi is enclosed for your information.

4. We shall be glad if you will please issue suitable instructions to your branches/controlling offices.

Yours faithfully,

Sd/-

Joint Chief Officer

30th September, 1991

Secretary Industries
All States and Union Territories
Commissioner/Director of Industries

SMALL, TINY AND INDUSTRY RELATED

SERVICE/BUSINESS ENTERPRISES

Sir,

Kindly refer to last para of this office letter of even No. dated 16th August 1991 in which it was stated that registration of SSSBE s may await receipt of instructions and that an illustrative list of SSSBE will follow.

II. Prior to the issue of this letter, guidelines were issued by the Department of Indl. Development vide their letter No.SSI(I)-12 (14)/82 dated 18th May 1982 to register all service oriented enterprises as small scale service Establishment (SSSE) in which some minimum investment in fixed assets in plant and machinery upto Rs.2 lakhs was involved and the same were located in rural areas and towns with a population upto 5 lakhs.

III. At different points of time, certain clarifications were issued by this office whether an activity was registered as SSI, SSSE or none of these. The entire list needs to be reviewed as some of these items/ activities do not really qualify as industrial activities to be covered under SIDO, while some others are also not manufacturing activities but only service activities. In the latter category, not all service activities will qualify as industry related service activities. As per the new policy on small scale industries, not all small service establishments will henceforth be eligible for benefits/concessions available to units in Small Scale Sector. Only such of those small enterprises whether service or business which are industry related (now named as SSSBE s) will be eligible for benefits/concessions admissible to Small Scale Sector. It has, therefore, been decided to re-classify various activities into Small Scale Industry (SSI) and Small Scale (Industry related) Service Business Enterprise (SSSBE).

IV. SMALL SCALE INDUSTRY

1) It will cover the manufacturing activities of one or more item(s) included in

a) Schedule I of Industries (Development & Regulation) Act, 1951 (65 of 1951).

b) The list of items exclusively reserved for manufacture in the Small Scale Sector.

c) Any manufacturing activity which is not covered above in (a) or (b).

The activities which fall within the purview of any Statutory Board or Committee or Special Agency viz. KVIC, Silk Board, Handicrafts Board, Textile Commissioner, Handloom Board, Coir Board etc.

2) The following activities had been recognised as SSI, falling within the purview of SIDO, through clarifications issued by this office from time to time.

i) Biochemical/Biological testing laboratories.

ii) Hatcheries.

iii) Tissue culture.

iv) Beedi making/Tobacco processing.

v) Colour Film processing studios.

vi) Laboratories engaged in testing of raw materials and finished products.

vii) Software servicing and data processing.

viii)Documentary film production units.

ix) Servicing industry undertakings engaged in maintenance, repair, testing or servicing of all types of vehicles and machinery of any description including electronic/electrical equipment/ instruments i.e., measuring/control instruments, televisions, tape recorders, VCR s, radios, transformers, motors etc.

x) Printing press.

It has now been decided that none of the activities above will be recognised as SSI. The activities (vi) to (x) will however be registrable as SSSBE s (See para VI below). The remaining activities i.e. (i) to (v) above will not be recognised even as SSSBE s.

Guidelines issued vide above referred letter dated 16.8.1991 are self-explanatory and the same be followed.

The following guidelines shall be followed for the registration of SSSBE s.

1. As a follow up, action to Policy Measures for promoting and strengthening small, Tiny and village Enterprises, announced on 6th August, 1991 Government have decided to give benefits of small scale sector to all Industry related service and Business Enterprises with investment upto Rs.5 lakhs in fixed assets, excluding land and building. For computation of value of fixed assets the original price paid by the original owner will be considered irrespective of the price paid by subsequent owners.

2. Instructions issued vide Ministry s circular letter no. SSI(I)-12 (14)/82 dated 18 May 1982 giving benefits to all small scale service Establishments (SSSEs) having fixed investment in plant and machinery upto Rs.2 lakhs etc., STAND SUPERCEDED. Now onwards, only industry related small scale service/Business Enterprises (SSSBE s) upto Rs.5 lakhs, as in (1) above will be eligible for benefits and concessions available to industries in small scale sector.

3. An illustrative list of SSSBE s and the illustrative list of activities that will not qualify as SSSBE

(i.e. small scale service and Business (Industry related) Enterprises) is given at Annexure I and Annexure II respectively.

4. Activities like hatchery, poultry farm, hair cutting salloons, beauty parlours etc. which were earlier declared as SSSE activity will no longer be registrable as SSI or SSSBE.

5. The activities like Hotels (including unstarred hotels, tea cafeteria and restaurants), small service medical establishment, small rural medical service establishment, broiler scheme, decorator (both pandal and lighting), naturopathic institutions, nature cure hospitals, dental clinics, slate quarries (mining process), Piggery, fishery, cattle rearig, rabbit farming butchery, meat selling, slimming centres, dairy (if only selling milk), hot mix plant were referred to this office in the past to ascertain whether these qualify to be registered as SSSE s? It is now clarified that none of these activities is registrable as SSSBE as the same are not recognised as industry related service business activities.

VII. The units which have been registered as SSI or SSSE prior to issue of these instructions, as per instructions prevailing then and which are not so registrable now, shall continue to get assistance as per existing registration. These cases need not be re-opened for deregistration. Existing units, registered as SSSE will get benefits of small scale until their investment exceeds Rs.5 lakhs.

Yours faithfully,

Sd/-

Director (SSI Bd.)

1. Advertising Agencies

2. Computer graphics & Data processing

3. Marketing Consultancy

4. Industrial Consultancy

5. Equipment Rental & Leasing

6. Typing Centres

7. Zeroxing

8. Industrial Photography

9. Industrial R & D Labs

10. Industrial Testing Labs

11. Computerised design and drafting

12. Creation of data bases suitable for foreign/Indian markets

13. Software development 14. Auto repair, services and garages

15. Documentary films on themes like, family planning, social forestry, energy conservation & commercial advertising

16. Laboratories engaged in Testing of Raw Materials Finished Products

17. Servicing Industry Undertakings engaged in maintenance, repair, testing or servicing of all types of vehicles & machinery of any description including Electronic/Electrical equipment/ instruments i.e. measuring/control instruments, televisions, tape recorders, VCRs, radios, transformers, motors, watches etc.

18. Printing Press

19. Laundry & Dry-cleaning

20. X-Ray Clinic

21. Tailoring

22. Servicing of Agricultural farm equipment e.g. Tractor, pump, Rig, Boring Machine etc.

23. Weigh Bridge

24. Photographic Labs

25. Blue printing and enlargement of drawing/designs facilities

26. ISD/STD Booths for industries

27. Teleprinter/FAX services.

3rd January, 1992

Secretary Industries

All States and Union Territories

Commissioner/Director of Industries

References :
1. No.2(3)/91-SSI Board dated 16.8.1991
2. No.2(3)/91-SSI Board dated 30.9.1991

Sir,

In continuation to this office letters of even number referred to above, this is to inform you that it has been decided to recognise the following activities as Small Scale (Industry Related) Service/ Business Enterprises i.e. SSSBE :-

a) Sub-contracting Exchanges (SEXs) established by Non-Government Industry Associations and

b) EDP Institute established by Voluntary Associations/Non-Government Organisations.

These will be eligible to get the registration with Directorate of Industries in the category of SSSBE and will be entitled to avail benefits available to small scale industries until their investment in fixed assets, excluding land and building, exceed Rs.5 lakhs.

Likewise it was declared vide letter dated 30.9.1991 referred to above that Software Servicing & Data Processing and Printing presses can be registered as SSSBE s. These items have been referred to in Para IV (2) (vii) and (x) respectively of the said letter.

This issue has been reviewed/reconsidered and it has been decided to recognise the said activities viz. Software Servicing & Data Processing (including computer graphics) and Printing press as industrial activity registerable as Small Scale Industry (SSI) and this office letter dated 30.9.1991 referred to above stands amended accordingly.

Yours faithfully,

Sd/-

Director (SSI Bd.)

1. Transportation

2. Storage (except cold storage which is recognised)

3. Retail/wholesale trade establishments

4. General Merchandise Stores

5. Sale outlets for industrial components

6. Health services including pathological laboratories

7. Legal services

8. Educational services

9. Social Services 10. Hotels.

All Scheduled Commercial Banks

Dear Sir,

As you are aware, our guidelines regarding advances to priority sector, vide circular RPCD.No.BC.29/PS.22-84 dated 16 March 1984, stipulate that in respect of composite loan upto Rs.25,000/- to artisans, village and cottage industries, no margin is to be maintained, and security by way of pledge/hypothecation/mortgage of assets created out of the loan will only be taken, and no collateral security/third party guarantee should be insisted. In this context, keeping in view the various factors such as general increase in the cost of production, ceilling fixed by SIDBI/NABARD on corresponding refinance scheme and persistent demand from the financing banks, we advise that we have no objection to your granting composite loans upto Rs.50,000/- to artisans, village and cottage industries. However, the margin and security norms for such advances will be as under :-

2. We also advise that in paragraph 2.9 of our circular RPCD.No.BC.29/PS.22-84 dated 16 March 1984, the words where individual credit requirements do not exceed Rs.25,000/- may be substituted by the words where individual credit requirements do not exceed Rs.50,000/- . Thus, artisans, village and cottage industries will be defined as : Artisans (irrespective of location) or small industrial activities (viz. manufacturing, processing, preservation and servicing) in villages and small towns with a population not exceeding 50,000, involving utilisation of locally available natural resources and/or human skills (where individual credit requirements do not exceed Rs.50,000/-) .

3. Please acknowledge receipt.

Yours faithfully,

Sd/-

Joint Chief Officer

All Scheduled Commercial Banks

Dear Sir,

Please refer to our circular RPCD.No.PLNFS.BC.48/SIU-20/87 dated 6 February 1987 prescribing separate parameters in regard to the rehabilitation of sick units in the SSI sector.

2. In the context of changes in the structure of lending rates of banks, it is considered necessary to revise the parameters on interest rates for various facilities under rehabilitation packages. It is also considered preferable to prescribe rates which will be fixed percentage points below the prevailing fixed/minimum lending rates, wherever applicable, for banks so as to obviate the need for change in the parameters, whenever there is a revision in lending rates on advances. Accordingly, it has been decided to revise the parameters on interest rates and promoters contribution in respect of sick SSI units under rehabilitation packages as under :

Interest on working capital may be charged at a rate 1.5 per cent below the prevailing fixed/ minimum lending rate, wherever applicable.

No interest may be charged on funded interest.

Interest on working capital term loan may be charged at a rate between 1.5 per cent and 3 per cent below the prevailing fixed/minimum lending rate wherever applicable.

Interest on existing term loan may be reduced where considered necessary by not more than 3 per cent in the case of tiny/decentralised sector units and by not more than 2 per cent in other cases, below the document rate.

Interest on the contingency loan assistance may be charged at the concessional rate allowed for working capital assistance.

Interest on fresh rehabilitation term loan may be charged at a rate 1.5 per cent below the prevailing fixed/minimum lending rate wherever applicable or as prescribed by SIDBI/NABARD, where refinance assistance is obtained from it for the purpose.

3. All interest rate concessions would be subject to annual review, depending on the performance of the units.

4. The revised parameters on interest rates will be applicable only to the packages which are yet to be prepared. In all other cases, such as where the packages sanctioned are under implementation, packages sanctioned but yet to be implemented and the draft packages finalised for final approval, the interest rates as committed in the packages may continue, subject to annual review.

Promoters contribution towards the rehabilitation assistance may be fixed at a minimum of 10 per cent of the additional long term requirements under the package in the case of tiny sector units and at 20 per cent of such requirements for other units. In the case of units in the decentralised sector, promoters contribution may not be insisted upon, as hitherto, for rehabilitation. It is, however, open to banks and financial institutions to stipulate a higher promoters contribution where warranted. At least 50 per cent of the above promoters contribution should be brought in immediately and the balance within six months. For arriving at promoters contribution, the monetary value of the sacrifices from banks, financial institutions and Government may be taken into account, in addition to the long term requirement of funds under the rehabilitation package. While evolving packages, it should be made a precondition that the promoters should bring in their contribution within the stipulated time frame.

6. Please acknowledge receipt.

Yours faithfully,

Sd/-

Chief Officer

All Scheduled Commercial Banks
(excluding Regional Rural Banks)

Dear Sir,

Please refer to paragraph 1 of our circular RPCD.No.PLNFS.BC.93/PS.72-91/92 dated 26 February 1992 on the above subject. It is mentioned therein that, if SIDBI refinance is available in respect of loans to industrial undertakings, where investment in plant and machinery exceeds the SSI classification under priority sector, but satisfies the SSI classification by Government of India, banks can avail of the same. As refinance is available from NABARD also in respect of loans to such industrial undertakings, banks can avail of the same. Hence the last sentence of paragraph 1 of our circular dated 26 February 1992, referred to above, may be substituted by the following :

Further, if SIDBI/NABARD refinance is available in respect of loans to such industrial undertakings, banks can avail of the same.

2. Please acknowledge receipt.

Yours faithfully

Sd/-

Joint Chief Officer

All Scheduled Commercial Banks

Dear Sir,

We advise that an ordinance (No.15 of 1992) titled The Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertakings Ordinance, 1992 has been promulgated and published in the Gazette of India, Extraordinary, Part II, Section 1 on 23 September 1992. We enclose a copy of the same for your information. The ordinance was promulgated in order to provide for and regulate the payment of interest on delayed payments to small scale and ancillary industrial undertakings and for matters connected therewith or incidental thereto.

2. We shall be glad if your concerned branches/offices are advised to bring it to the notice of the SSI and ancillary units financed by your bank.

Yours faithfully,

Sd/-

Joint Chief Officer

1. Secretaries,

Government of India.

2. Secretary (Industries), All States/UTs.

3. Director (Industries), All States/UTs.

Sir,

An Ordinance (No.15 of 1992) titled The Interest on Delayed Paymens to Small Scale and Ancillary Industrial Undertakings Ordinance, 1992 has since been promulgated and published in the Gazette of India, Extraordinary, Part-2, Section-1 on 23rd September, 1992. A copy of the same is enclosed for your information with the request to bring it to the knowledge of all concerned for adherence. It is also requested that the contents of the Ordinance may be given wide publicity.

2. This Department is keen to assess the impact of the Ordinance as per its objectives. Hence, it is requested that feed back on the impact of the ordinance at the field level may be made available to us. This will also enable the department to assess the shortcomings, if any, in the Ordinance so that corrective measures may be taken.

This may be treated as Most Urgent.
Yours faithfully

Sd/-

Director (SSI-Board)

No. 60

New Delhi, Wednesday, September 23, 1992/Asvina 1, 1914 Separate paging is given to this Part in order that it may be filed as a separate compilation.

(Legislative Department)

New Delhi, the 23rd September, 1992/Asvina 1, 1914 (Saka)

Promulgated by the President in the Forty-third Year of the Republic of India

An Ordinance to provide for and regulate the payment of interest on delayed payments to small scale and ancillary Industrial undertakings and for matters connected therewith or incidental thereto.

WHEREAS Parliament is not in session and the President is satisfied that circumstances exist which render it necessary for him to take immediate action; Now, THEREFORE, in exercise of the powers conferred by clause (1) of article 123 of the Constitution, the President is pleased to promulgate the following Ordinance :-

All Scheduled Commercial Banks

Dear Sir,

Please refer to our circular RPCD.No.PLNFS.BC.95/PS.72-91/92 dated 28 February 1992, advising that advances to Small, Tiny and Industry Related Service/Business Enterprises having investment upto Rs.5 lakhs in fixed assets, excluding land and building, and which are located in any village/town irrespective of its population, would be entitled for benefits/concessions as available to industries in Small Scale Sector. In this connection it is clarified that SSSBEs can be registered in any part of the country, without any locational restriction (including cities/metropolitan areas) and are eligible for the same benefits/concessions that are admissible to small scale industries, provided they satisfy the above investment criteria.

Yours faithfully,

Sd/-

Joint Chief Officer

All Scheduled Commercial Banks

Dear Sir,

Please refer to the circular No.CPC.BC.129/07.01.279/92-93 dated 7 April 1993 addressed by our Governor to all scheduled commercial banks. As mentioned therein, considering the contribution of the SSI sector to overall industrial production, exports and employment and also recognising the need to give a fillip to this sector, a special package of measures has been devised to ensure adequate and timely credit to this sector. While doing so, the recommendations of the Committee to Examine the Adequacy of Institutional Credit to the Small Scale Industries Sector and Related Aspects headed by Shri P. R. Nayak and other factors have been taken into account. The salient features of the package are set out below:

2. Examination of bank finance profile of working capital to the small scale sector by the Committee has revealed that this sector as a whole received a level of working capital which was only 8.1 per cent of its output. The village industries and the smaller tiny industries among them could get working capital finance to the extent of only about 2.7 per cent of their output. Banks are, therefore, advised to give preference to village industries, tiny industries and other small scale units in that order, while meeting the credit requirements of the small scale sector.

3. At present norms for inventory and receivables are applicable to all units enjoying aggregate fund-based working capital credit limits of Rs.10 lakhs and above from the banking system. Units enjoying limits of Rs.10 lakhs and above but upto Rs.50 lakhs are subject to the first method of lending, as recommended by the Tandon Committee, for assessment of their Maximum Permissible Bank Finance (MPBF). It has been decided that henceforth for the credit requirements of village industries, tiny industries and other SSI units having aggregate fund-based working capital credit limits upto Rs.50 lakhs from the banking system, the norms for inventory and receivables as also the First Method of Lending will not apply. Instead such units may be provided working capial limits computed on the basis of a minimum of 20 per cent of their projected annual turnover for new as well as existing units. The banks may satisfy themselves about the reasonableness of the projected annual turnover of the applicants on the basis of annual statements of accounts or any other documents such as returns filed with sales-tax/revenue authorities and also ensure that the estimated growth during the year is realistic. These SSI units would be required to bring in 5 per cent of their annual turnover as margin money. In other words, 25 per cent of the output value should be computed as working capital requirement of which atleast four-fifths should be provided by the banking sector, the balance one-fifth representing the borrower s contribution towards margin for the working capital. In cases where output exceeds the projections or where the initial assessment of working capital is found inadequate, suitable enhancement in the working capital limits should be considered by the competent authority as and when this is deemed necessary. Drawals against the limits should be allowed against the usual safeguards so as to ensure that the same are used for the purpose intended. Banks will have to ensure regular and timely submission of monthly statements of stocks, receivables, etc. and also periodical verification of such statements vis-a-vis physical stocks. Other SSI units having aggregate fund-based working capital limits of above Rs.50 lakhs would, however, continue to be governed by the existing guidelines on lending norms, method of lending, etc.

4. The banks should step up the credit flow to meet the legitimate requirements of the SSI sector in full during the Eighth Five year Plan. For this purpose the banks should draw up annual credit budget for the SSI sector on a bottom-up basis. Each branch of the bank should prepare an annual budget in respect of working capital requirements at all SSIs before the commencement of the year. Such budgeting should cover (a) functioning (healthy) units which already have borrowing limits with the branch (b) new units and units whose proposals are under appraisal and (c) sick units under nursing and also sick units found viable and for which rehabilitation programmes are under preparation. To the extent possible, the budget may be prepared after discussions/feedback received from the borrowing units. The budget should take into account, among other relevant aspects, normal sales growth, price rise during the past year, anticipated spurt in business etc. The budget of each branch should be sent through the Regional/Zonal Office to the Head Office of the bank for consolidation and earmarking of the funds for SSI financing.

5. Reserve Bank of India had issued a set of guidelines in February 1987, which laid down, inter alia, the definition of a sick SSI unit, viability of a sick SSI unit and the extent of reliefs/concessions which could be granted by commercial banks as part of the rehabilitation package. The definition of sick SSI unit and the extent of concessions which could be extended were subsequently modified vide our circular letters RPCD.No.PLNFS.BC.122/SIU.20/88-89 and PLNFS.BC.1/SIU.20/92-93 dated 8 June 1989 and 1 July 1992, respectively. In the light of the recommendations of the Committee, it has been decided to further modify the definition of a sick SSI unit and the rate of interest applicable for Working Capital Term Loan (WCTL) granted as a part of the rehabilitation package as follows :

a) Definition of sick SSI units

An SSI unit may be classified as sick when;

i) any of its borrowal accounts has become a doubtful advance i.e. principal or interest in respect of any of its borrowal accounts has remained overdue for a period exceeding 21/2 years, and

ii) there is erosion in the net worth due to accumulated cash losses to the extent of 50 per cent or more of its peak net worth during the preceding two accounting years.

b) Interest on WCTL

In respect of WCTL the rate of interest applicable may be 1.5 to 3.0 percentage points below the prevailing fixed rate/minimum lending rate, wherever applicable, but not more than the lowest lending rate for tiny/decentralised sector units and not more than 5 percentage points below the minimum lending rate in the case of advances of over Rs.2 lakhs (i.e. the highest lending rate) for the other SSI units.

6. An effective grievance redressal machinery within each bank which can be approached by the SSI in case of difficulties has to be set up. Separate instructions in this regard will follow.

7. It is desirable that a single financing agency meets both the requirement of the working capital and term credit for small scale units. The Single Window Scheme (SWS) of SIDBI enables the same agency-SFC or commercial bank - as the case may be, to provide term loans and working capital to SSI units having a project outlay upto Rs.20 lakhs and working capital requirement upto Rs.10 lakhs. The banks are advised to adopt this approach.

8. Procedure and time frame laid down for disposal of loan applications received form SSI borrowers, vide our circular letter RPCD.No.PLNFS.BC.6/PS.72/88 dated 30 July 1988, should be strictly enforced.

9. The decision on the other recommendations of the Committee will be conveyed in due course.

Meanwhile, you may take necessary action in regard to the above and keep us apprised of action taken in the matter.

10. Please acknolwedge receipt.

Yours faithfully,

Sd/-

Chief Officer

All Scheduled Commercial Banks

Dear Sir,

Please refer to our circular RPCD.No.PLNFS.BC.99/06.02.31/92-93 dated 17 April 1993 on the captioned subject. The decisions taken on some of the other recommendations of the Nayak Committee on small scale industries sector are set out below :

2. RBI have issued, from time to time, guidelines to banks in the matter of financing the working capital requirements of small scale units, rehabilitation of sick small scale units, co-ordination between commercial banks and State Financial Corporations (SFCs) in meeting the credit requirements of these units and other related aspects. There are, however, several representations from the industry that banks do not always follow these guidelines. A sample study conducted by the Reserve Bank had also revealed that the compliance by banks at the field level with these guidelines was deficient in certain respects. Banks should therefore, take immediate steps to ensure full adherence in letter and spirit by all their branches and controlling offices to the RBI guidelines. Further, with a view to ascertaining the position regarding implementation of these guidelines by the branches, banks themselves should carry out special studies on an annual basis on as large a sample of branches as possible. The findings of these study should be reported to us periodically indicating, among others, the steps taken for rectifying the deficiencies, if any, observed in the process.

3. We have reiterated in our circular dated 17 April 1993 referred to above that the procedure and time frame laid down for disposal of loan applications received from SSI borrowers should be strictly enforced. In this context, we advise that whenever application for fresh limits/enhancement of existing limits was not considered favourably by the sanctioning official or where the limits applied for are proposed to be curtailed, the same should be referred to the next higher authority with all relevant particulars, to ensure scrutiny by an independent authority and the latter should confirm the decision of the sanctioning official or otherwise dispose of the same, within a time-bound manner. Another alternative which would also help eliminate delays inherent in the consideration of the proposals by the successive tiers in the heirachy and facilitate timely decisions on credit proposals would be for banks to adopt a system of Committee approach, in which decisions are taken by the competent authority after a structured discussions with the branch manager and also the authorities at the intervening levels. This system would save considerable time and avoidable correspondence between the various authorities.

4. Problems faced by the SSI sector in regard to bank finance, to a large extent, could be solved if the branch level officials have the right aptitude, skills and orientation. In understanding their role the branch managers/officials at the branches should be made aware of the importance of small scale sector from the point of view of creation of additional employment opportunities, exports, etc. A healthy growth of the sector will facilitate smooth loan recovery in the SSI borrowal accounts. Further, timely assistance will prevent these accounts from becoming sticky. The aforesaid aspects should, therefore, form part of the inputs in the training imparted to the banks staff. There should be an interaction between the banks staff and the SSI borrowers as part of the training programmes. Banks may also consider awarding trophies to branches for outstanding performance in financing SSI units as a mark of public recognition.

5. One of the complaints frequently voiced by the SSI units pertains to insistence by some banks on compulsory deposit mobilisation as a quid pro quo for the sanction of credit facilities to the units. While enlisting the co-operation of banks customers for deposit mobilisation cannot be faulted, insisting on deposit mobilisation of stipulated amounts as a precondition to the sanction of credit or otherwise has no justification. You may, therefore, issue appropriate instructions to your controlling offices/branches to desist from such practices.

6. The second All India Census of SSI (1988) carried out by the Development Commissioner (SSI), Government of India has revealed that there were 85 districts in the country each with more than 2000 registered SSI units (units registered with the Industries Department of the State Governments) and another 110 districts each having between 1000 and 2000 registered SSI units. A list containing the names of these 204 district is enclosed for your information. It has been decided that while State Financial Corporations (SFCs) would act as the principal financing agency for SSIs in 40 out of the 85 districts referred to above, to take care of both term loan and working capital requirements of all new SSI units which can be financed under the Single Window Scheme (SWS) of SIDBI, commercial banks should act as the principal financing agency under the SWS in the remaining 45 districts as well as in the rest of the country. The process of allocating 40 districts to SFCs to act as principal financing agency is in progress and the names of the districts so allocated to SFCs will be furnished to you in due course. It has also been decided that in order to effectively discharge their responsibility commercial banks should open specialised branches to cater to the SSI clientele in the 45 districts where they will be acting as the principal financing agency as also in the 119 districts each having between 1000 and 2000 registered SSI units. Banks should also consider converting such of the branches as have a fairly large number of SSI borrowal accounts into sepcialised branches. However, pending allocation of districts to SFCs to act as principal financing agency, the process of opening specialised branches in the 119 districts referred to above should be initiated on a priority basis. The concerned lead bank in the district would identify banks, depending upon the number of SSI borrowal accounts serviced by them for opening of specialised branches and keeping in view the guidelines issued by RBI in this regard vide Circular DBOD.No.BL.BC.132/22.01.001/92 dated 20 May 1992.

7. In our circular RPCD.No.PLNFS.BC.48/SIU.20-87 dated 6 February 1987, we have enumerated the steps to be taken by banks for arresting the sickness among SSI units at the incipient stage itself. RBI has since issued revised instructions to banks on the system of assets classification inter alia, classifying the advances of banks into four categories viz. Standard, Sub-standard, Doubtful and Loss. When any advance to an SSI unit has to be rated down from Standard to Sub-standard category the concerned bank branch should go on alert and make a full enquiry into the financial health of the unit, its operations, etc. and report its findings to higher authorities. Such reports should pin-point the factors which have led to default and also indicate whether there are signs of incipient sickness in the unit. The progress of the unit should be kept under close watch and wherever necessary additional finance should be provided if such a course is warranted. As soon as the advance comes under the category doubtful the position relating to all the advances granted to the concerned unit should be reveiwed and the unit classified as sick if it satisfies the condition relating to the erosion in net worth. Viability studies/nursing programmes should be taken up within 3 months and 6 months, respectively from the identification of the unit as sick. In all matters relating to decisions on viability of a sick SSI unit there should be a proper system within the banks for review of such decisions on an appeal made by the aggrieved unit.

8. In order to tackle the problem of sickness among the SSI units expeditiously, RBI had advised banks in para 4 of circular DBOD.No.CAS.BC.133/C.446(SIU)-76 dated 26 November 1976 (copy enclosed) that they should set up cells at important regional centres also; besides the cell at Head Office to deal with sick industrial units and provide expert staff, including technical personnel to look into the technical aspects. We shall be glad if you will please take expeditious steps to set up separate cells at all your controlling offices, if not already done, to tackle the problems of sickness among the small scale units.

9. The decision on the remaining recommendations of the Committee will be conveyed in due course. In the meantime, you may take necessary action in regard to the above and keep us apprised of action taken in the matter.

10. Please acknowledge receipt.

Yours faithfully,

Sd/-

Chief Officer Encls : 7

All Scheduled Commercial Banks

Dear Sir,

Please refer to our circular letter No.DBOD.CAS.BC.71/C.446(SIU)-76 dated the 29th June 1976, advising the banks, inter alia, to keep us informed of the progress made in identifying the sick units, etc., as also furnish us with the names of such units enjoying total credit limits of Rs.1 crore or more from the banking system.

2. In order to enable us to have a broad idea of the extent of sickness in different industries, the reasons for sickness, present position and the task involved in rehabilitation, we shall be glad if you will please furnish us information, in duplicate, as in the proforma enclosed, in respect of all sick units grouped industrywise every calender quarter, so as to reach us within 15 days from the close of the quarter. The data for the quarter ended 30th September 1976 should reach us by 15th December 1976.

For the above purpose, a unit may be considered as sick if it has incurred cash loss for one year and, in the judgement of the bank, is likely to continue to incur cash losses for the current year as well as the following year and which has an imbalance in its financial structure, such as current ratio of less than 1:1 and worsening debt equity ratio (total outside liabilities to net worth). Such units would invariably have a working capital term loan which they are not in a position to repay. These units will require a comprehensive rehabilitation programme and intensive care over a period and should be distinguished from those units which merely indicate incipient sickness calling for a close watch and preventive remedial action on the part of the banks. The units to be included in the statement as per enclosed proforma are those which are already sick and not those which show signs of incipient sickness.

3. Whatever may be the reasons for sickness in an industrial unit, the symptoms of sickness get reflected in the financial indicators. The banks should, therefore, make every effort to ensure that the information system, introduced, on the recommendations of RBI Study Group, is utilised to monitor the performance of the borrowing units. They should also obtain half-yearly pro-forma balance sheet and profit and loss account from the borrowers, within two months from the end of the half-year, and gear themselves up to take quick remedial action, wherever necessary. For this purpose, we invite your attention to the guidelines, issued by us in terms of our circular letter DBOD.No.CAS.(COD)83/ 27C-76 dated the 14th July 1976, for focussing the attention of the operating staff on the major aspects which should not be missed while scrutinising the annual/quarterly statements. Any adverse trend noticed, which would be an alarm signal, may be subjected to a deeper study.

4. To tackle the problem expeditiously, it may be necessary for banks to set up cells at important regional centres also, besides the cell at the Head Office and provide expert staff, including technical personnel to look into technical aspects. May be that in many cases remedial action required to be taken by the banks would not be confined only to financial controls, but also extend to improving/ changing the borrowers management and removing deficiencies of various types in the arrangements for purchase, production marketing etc.

5. In all cases of sick units, the banks should assess the situation and come to an early decision about the desirability of rehabilitating them. The discussions with the concerned parties, obtaining the feasibility reports etc., should not take long and a target date should be fixed, as time is of the essence. What the banks should specifically bear in mind is that they should plan a timeframe, of say about two months, within which they should come up with necessary proposals for assistance, once the viability is established. In cases the term-lending institutions are also involved, there should be close co-ordination between banks and such institutions for exchanging information and views in not only determining the viability but also in drawing up the nursing programme and monitoring the performance. If the proposal involves additional financial assistance and the borrower is covered by our Credit Authorisation Scheme, the banks should obtain our authorisation under the Scheme, furnishing full details about the rehabilitation proposal.

6. We need hardly emphasise that identifying units which have already become sick and those which are likely to become sick is of the utmost importance not only from the point of view of the financial banks but also the national economy. Of equal importance is the need for quick nursing programme where a sick unit has potential viability and for preventive remedial action where a unit shows signs of incipient sickness. The banks are, therefore, requested to take up this task in right earnest in a spirit of urgency.

Yours faithfully,

Sd/-

Joint Chief Officer

All Scheduled Commercial Banks

Dear Sir,

Please refer to para 2 of our circular RPCD.No.PLNFS.BC.88/PS.72/91-92 dated 12 February 1992 advising you of the decision of Government of India to keep operation of the instructions on clubbing of investments for determining the status of units referred to in our circular RPCD.No.PLNFS.BC.76/PS.72/88-89 dated 25 February 1989 in abeyance till further orders. Government of India Ministry of Industry have now outlined detailed guidelines in respect of equity participations and the meaning of the terms owned, controlled and a subsidiary for the purpose of getting qualified as Small Scale Industries undertakings etc. vide Gazette Notification No. S. O. 2(E) dated 1 January 1993. A copy of the Notification is enclosed. We advice that for the purpose of determining the Small Scale Industries status of the units in term of our circular dated 25 February 1989, you may please follow the guidelines now outlined by Government of India.

2. We shall be glad if you will please issue suitable instructions to your branches/controlling offices.

Yours faithfully,

Sd/-

Joint Chief Officer

Encls.: 2

1st January, 1993

S.O.2(E) whereas the Central Government considers it necessary with a view to ascertaining which ancillary and small scale industrial undertakings need supportive measures, exemptions or other favourable treatment, under the Industries (Development and Regulation) Act, 1951 for the purposes specified in Section 11-B of the said Act:

And whereas the draft Notification was laid before each House of Parliament for a period of 30 days as required under Sub-Section (3) of Section 11-B of the said Act.

And whereas no modification in the proposed Notification has been suggested by both Houses of Parliament.

Now, therefore, in exercise of the powers conferred by Sub-section (1) of Section 11-B and Subsection (1) of Section 29-B of the said Act, the Central Government for the purposes of further specifing the requirements which shall be complied with by the industrial undertaking to enable them to be regarded as an ancillary or a small scale industrial undertaking for the purposes of the said Act, makes the following amendments in the Notification of the Government of India in the Ministry of Industry (Department of Industrial Development) No.S.O.232(E) dated the 2nd April, 1991 namely :-

In the said Notification, in the Table, in paragraph II the existing note shall be numbered as Note 1 thereof and after Note-1, as so numbered, the following Explanation and Note shall be inserted, namely :

Explanation : For the purposes of this Note -

a) Owned shall have the meaning as derived from the definition of the expression owner specified in clause (f) of Section 3 of the Industries (Development & Regulation) Act, 1951 (65 of 1951);

b) Subsidiary shall have the same meaning as in clause (47) of Section 2, read with Section 4, of the Companies Act, 1956 (1 of 1956); c) the expression controlled by any other industrial undertaking means as under :

i) where two or more industrial undertakings are set up by the same person as a proprietor, each of such industrial undertakings shall be considered to be controlled by the other industrial undertaking or undertakings.

ii) where two or more industrial undertakings are set up as partnership firms under the Indian Partnership Act, 1932 (1 of 1932) and one or more partners are common partner or partners in such firms, each such undertaking shall be considered to be controlled by the other undertaking or undertakings;

iii) where industrial undertakings are set up by companies under the Companies Act, 1956 (1 of 1956), an industrial undertaking shall be considered to be controlled by other industrial undertaking if :

a) the equity holding by other industrial undertaking in it exceeds 24% of its total equity; or

b) the management control of an undertaking is passed on to the other industrial undertaking by way of the Managing Director of the first mentioned undertaking being also the Managing Director or Director in the other industrial undertaking or the majority of Directors on the Board of the first mentioned undertaking being the equity holders in the other industrial undertaking in terms of the provisions of (a) and (b) of sub-clause (iv);

iv) The extent of equity participation by other industrial undertaking or undertakings in the undertaking as per sub-clause (iii) above shall be worked out as follows :

a) the equity participation by other industrial undertaking shall include both foreign and domestic equity;

b) equity participation by other industrial undertaking shall mean total equity held in an industrial undertaking by other industrial undertaking or undertakings, whether small scale or otherwise, put together as well as the equity held by persons who are Directors in any other industrial undertaking or undertakings;

c) equity held by a person, having special technical qualification and experience, appointed as a Director in a small scale industrial undertaking, to the extent of qualification shares, if so provided in the Articles of Association, shall not be counted in computing the equity held by other industrial undertaking or undertakings even if the person concerned is a Director in other industrial undertaking or undertakings;

v) Where an industrial undertaking is a subsidiary of or is owned or controlled by, any other industrial undertaking or undertakings in terms of sub-clause (i), sub-clause (ii), or sub-clause (iii), and if the total investment in fixed assets in plant and machinery of the first mentioned industrial undertaking and the other industrial undertaking or undertakings clubbed together exceeds the limit of investment specified in paragraph I or II of this Table, as the case may be, none of these industrial undertakings shall be considered to be a small scale or ancillary industrial undertaking.

a) In calculating the value of plant and machinery for the purposes of this Notification, the original price thereof, irrespective of whether the plant and machinery are new or second hand, shall be taken into account.

b) In calculating the value of plant and machinery, the following shall be excluded, namely:

i) the cost of equipments such as tools, jigs, dies moulds and spare parts for maintenance and the cost of consumable stores;

ii) the cost of installation of plant & machinery;

iii) the cost of Research and Development (R&D) equipment and pollution control equipment; iv) the cost of generation sets, extra transformer, etc. installed by the undertaking as per the regulations of the State Electricity Board;

v) the bank charges and service charges paid to the National Small Industries Corporation or the State Small Industries Corporation;

vi) the cost involved in procurement or installation of cables, wiring, bus bars, electrical control panels (not those mounted on individual machines), oil circuit breakers/miniature circuit breakers, etc., which are necessarily to be used for providing electrical power to the plant and machinery/safety measures;

vii) the cost of gas producer plant;

viii)transportation charges (excluding of taxes e.g. Sales tax, Excise etc.) for indigenous machinery from the place of manufacturing to the site of the factory;

ix) charges paid for technical know-how for erection of plant and machinery;

x) cost of such storage tanks which store raw-materials finished products only and are not linked with the manufacturing process; and

xi) cost of fire fighting equipments.

c) In the case of imported machinery, the following shall be included in calculating the value, namely :

i) Import duty (excluding miscellaneous expenses as transportation from the port to the site of the factory, demurrage paid at the port);

ii) The shipping charges;

iii) Customs clearance charges; and

iv) Sales Tax.

Yours faithfully,

Sd/-

Joint Secretary to the Govt. of India

(No.10(5)/91-LP)

All Scheduled Commercial Banks

Dear Sir,

You may please recall that the Governor in the credit policy announced for the half year ended March 1993 has also announced a special package for Small Scale Industries emphasising the need for providing more credit to this sector with a simple formula of giving working capital credit limits to Small Scale Industries computed on the basis of a minimum of 20% of their projected annual turnover (c.f. our circular No.CPC.BC.129/07.01.279/92-93 dated 7 April 1993). However, it is learnt that many banks branches are not providing the working capital credit limits to the SSIs based on this formula and they continue to observe their earlier procedure in this regard. You are therefore requested to look into this and advise all such branches not observing these norms immediately to ensure that the SSIs whose credit limit in individual cases does not exceed Rs.1 crore are sanctioned working capital limits based on the new formula and that they do not suffer for want of credit from the banks.

2. Further the banks were advised to open the special SSI branches or convert those branches which have a fairly large number of SSI borrowal accounts into the specialised branches vide RPCD circular No.RPCD.PLNFS.BC.1/06.02.13/92-93 dated 3 July 1993. Subsequent to that, Governor in his meeting taken with the Chairman of some major public sector banks on 23 September 1993 had indicated that each bank should open some special SSI branches say within a period of six months. The minutes of the meeting were forwarded to the banks vide letter No.RPCD.PLNFS/595/06.02.31/ 93-94 dated 8 October 1993. I hope that your bank has initiated effective steps to open special SSI branches by now. Kindly let us know the number of branches proposed to be opened by March 1994. In case your bank has already opened special SSI branches I shall be glad to know the number of such branches opened so far.

With kind regards

Yours sincerely,

Sd/-

All Scheduled Commercial Banks

Dear Sir,

Please refer to our circular RPCD.No.PLNFS.BC.66/06.02.31/93-94 dated 20 November 1993 enclosing a list of 45 districts earmarked for the commercial banks to act as the principal financing agency for SSI units.

2. It has now been decided that of the remaining 40 districts, in 23 districts as per the list I enclosed SFCs will act as principal financial agency granting the term loans as well as working capital loans under Single Window Scheme. The remaining 17 districts as per list II are allotted to the commercial banks. In the metropolitan city of Calcutta, State Level Convenor Bank will act as the principal financing agency and in the remaining 16 districts, lead banks concerned for the districts.

3. You are requested to take an early action under advice to this office and ensure opening of specialised SSI branches in the allotted districts if no such branch is presently in existence. In this connection your attention is invited to the recent letter D.O.RPCD.No.PLNFS.BC.81/06.02.31/93-94 dated 15 January 1994 from our Deputy Governor (D. R. Mehta).

Yours faithfully,

Sd/-

Joint Chief Officer

Encls.: 2

All Scheduled Commercial Banks,

Dear Sir,

Please refer to our Circular Letter RPCD.No.PLNFS.BC.99/06.02.31/92-93 dated 17 April 1993 on the captioned subject. In this connection it is advised that the paragraph on Interest on WCTL (page 4 of the above circular) is amended and the same may be read as under:

In respect of WCTL the rate of interest applicable may be 1.5 to 3.0 percentage points below the prevailing fixed rate/minimum lending rate, wherever applicable, to all the SSI units including the tiny/decentralised sector units.

It is further clarified in this regard that wherever rehabilitation concessions have already been given in nursing programmes, as per our circular dated 17 April 1993, indicated above, such cases need not be reopened and the concessions may be continued to be provided as mentioned in our Circular dated 17.4.1993.

2. Please acknowledge receipt.

Yours faithfully,

Sd/-

Jt. Chief Officer