In order to increase the credit flow to the small business and to weaker sections of the economy, the RBI proposes to increase the existing overall limit to Rs 20 lakh in respect of small business from the current Rs 10 lakh. The RBI has also removed the ceiling for working capital.
Further, it allowed banks to fix individual limits for working capital depending upon the requirements of different activities. The RBI has increased the individual credit limit to artisans, village and cottage industries to Rs 50,000 from the existing limit of Rs 25,000.
The limits will be under the overall limit of 25 per cent advances to weaker sections under priority sector or 10 per cent of net bank credit.