RBI issues draft guidelines on loan system for bank credit
Mumbai, June 11: In a move to enhance credit discipline among larger borrowers, the RBI on Monday proposed a "minimum level of loan component" of 40 per cent for borrowers having an aggregate fund-based working capital limit of Rs 150 crore and above from the banking system, a condition proposed to be effective from October 1, 2018.
Issuing the draft guidelines on the loan system for bank credit, the Reserve Bank of India (RBI) also said that the undrawn portion of cash credit and overdraft limits sanctioned to larger borrowers will attract a credit conversion factor of 20 per cent, effective from April 1, 2019.
The central bank said drawings up to 40 per cent of the total fund-based working capital limits shall only be allowed from the "loan component".
"Drawings in excess of the minimum loan component threshold may be allowed in the form of cash credit facility," it said.
According to the RBI, cash credit is by far the most popular mode of working capital financing, which also poses several regulatory challenges "such as perpetual roll overs, transmission of liquidity management from the borrowers to banks/RBI, hampering of smooth transmission of monetary policy, etc".
"Effective from April 1, 2019, the undrawn portion of cash credit/overdraft limits sanctioned to the aforesaid large borrowers, irrespective of whether unconditionally cancellable or not, shall attract a credit conversion factor of 20 per cent," the statement said.
The 40 per cent loan component will be revised to 60 per cent from April 1, 2019, it added.
The RBI has invited comments on the draft guidelines from banks and other stakeholders by June 26.
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'Low-quality' catheters supplied to West Bengal govt hospitals at high price, probe ordered
Kolkata (PTI): The West Bengal health department has launched a probe into the supplies of allegedly low-quality and locally made catheters at a high price to several government hospitals, posing a risk to the lives of patients undergoing treatment in these facilities, officials said.
Such central venous catheters (CVCs) were allegedly supplied to at least five medical colleges and hospitals in the state, defying allocation of international standard-compliant CVCs, they said.
The distribution company, which has been accused of supplying these catheters to government hospitals, admitted to the fault but placed the blame on its employees.
"We started checking stocks some time back and found these locally made CVCs in my hospital store. These catheters are of low quality as compared to those allocated by the state. We have informed the state health department," a senior official of the Calcutta Medical College and Hospital told PTI.
Low-quality catheters were also found in the stores of other hospitals, which indicates "possible involvement of insiders in the scam", a health department official said.
The low-quality CVCs were supplied by a distributor in the Hatibagan area in the northern part of Kolkata for the last three to four months, he said.
"Such kinds of local CVCs are priced around Rs 1,500 but the distributor took Rs 4,177 for each device," the official said.
A CVC is a thin and flexible tube that is inserted into a vein to allow for the administration of fluids, blood, and other treatment. It's also clinically called a central line catheter.
"An initial probe revealed that the distribution company Prakash Surgical had supplied the low-quality and locally manufactured catheters to several government hospitals instead of the CVCs of the government-designated international company.
"All the units will be tested and a proper investigation is on to find out who benefited from these supplies," the health department official said.
The distribution company blamed its employees for the supply of inferior quality catheters.
"I was sick for a few months. Some employees of the organisation made this mistake. We are taking back all those units that have gone to the hospitals. It's all about misunderstanding," an official of the distribution company told PTI.
According to another state health department official, a complaint was lodged with the police in this connection.
Asked about how many patients were affected by the usage of such low-quality CVCs, the official said, "The probe would also try to find that out".
According to sources in the health department, some of the staff of the hospitals' equipment receiving departments and some local officials of international organisations might be involved in the alleged irregularities.
