Stiff norms for working capital soon

The Reserve Bank of India (RBI) has decided to stipulate a loan component in working capital finance of large borrowers to improve credit discipline among them.

The move will ensure that a component of the principal gets repaid at regular intervals, banking industry officials said.

“The introduction of a mandatory loan requirement in working capital loans will provide the much-needed credit discipline,” said Rajnish Kumar, chairman, State Bank of India. The move would also help banks in avoiding asset-liability mismatch, the sources said.