Mumbai, Apr 1 (KNN)  Retaining the policy interest rates unchanged and disappointing the industry, the RBI has advised the commercial banks to offer differential interest rates to micro and small enterprises (MSEs) and other borrowers whose loans are covered under the credit guarantee.

Unveiling the first bi-monthly monetary policy, RBI Governor Raghuram Rajan said, “With a view to ensuring fair and transparent credit pricing and to give a fillip to the flow of credit to micro and small enterprises (MSEs) borrowers, it would be desirable for SCBs to provide differential interest rates for MSEs and other borrowers whose loans are covered under the credit guarantee scheme.

“SCBs are encouraged to undertake a review of their loan policy governing extension of credit facilities to the MSE sector and should consider using Board approved credit scoring models in their evaluation of the loan proposals of MSE borrowers,” he added.

The Reserve Bank has released a concept paper on Trade Receivables and Credit Exchange for micro, small and medium enterprises (MSMEs) in March 2014 on its website for public feedback.

The model outlined in the paper envisages a credit exchange with both primary and secondary market segments that will help address problems faced by the MSME segment on delayed payments and dependency on their corporate buyers.

The Reserve Bank will work towards implementation of the model based on feedback received.

On financial inclusion, the fourth pillar, the recommendations of the Mor Committee on accelerating the flow of credit to those at the bottom of the pyramid and enlargement of catchment area of the Business Correspondents (BCs), including through possible inclusion of new entities as BCs, are under examination, the apex bank said.

“To overcome the challenge of cash management of BCs which is impeding the scaling up of the BC model, the Reserve Bank will collate best practices and issue a fresh set of guidelines to commercial banks,” it added.

Considerable focus was given to financial inclusion of which consumer protection is an integral aspect.

In this regard, the Reserve Bank proposes to frame comprehensive consumer protection regulations based on domestic experience and global best practices.

In the interest of their consumers, banks should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty, the RBI said.

Further, banks should also not take undue advantage of customer difficulty or inattention. Instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit services available on such accounts to those available to Basic Savings Bank Deposit Accounts and restore the services when the balances improve to the minimum required level, it said.

It has also asked banks not to levy penal charges for non-maintenance of minimum balances in any inoperative account.  In addition, banks should limit the liability of customers in electronic banking transactions in cases where banks are not able to prove customer negligence.   (KNN Bureau)