RBI's tighter norms for working capital would increase NPAs: India Inc

RBI proposed that at least 40% of sanctioned working capital limit of a company should have a term loan component

The finance heads of Indian companies said the Reserve Bank India’s (RBI’s) proposal to limit the working capital facilities is “micro-management” and impacts their businesses negatively, with many companies even defaulting on loans.

On Monday, the RBI proposed that at least 40 per cent of the sanctioned working capital limit of a company should have a term loan component. For borrowers with an aggregate fund-based working capital limit of Rs 1.5 billion and above from the banking system, a minimum level of ‘loan component’ of 40 per cent will be effective from October 1, 2018.  This 40 per cent loan