State Bank of India extends production-linked credit facilities to small-scale industries, ancillary industrial units and village and cottage industrial units on liberal terms and conditions.

Under this scheme, the quantum of advances is not linked to the security furnished, but the genuine requirements of the unit.

The pricing of the loan is based on credit assessment, and the units with strong ratings may be given finer rates.

No collateral security is required for loans up to Rs 5 lakh. Composite term loans can be sanctioned up to Rs 25 lakh combining term loan and working capital.

Q. What are the types of financial assistance under the Liberalized scheme?

A. The Liberalized scheme offers a range of financial products including the following:

  • Term loans for acquisition of fixed assets

  • Working capital loans financing current assets

  • Letter of credit for acquisition of machinery and purchase of raw materials

  • Bank guarantee in lieu of security deposits to be made with government department/other departments for execution of orders.

  • Deferred payment guarantees for purchase of machinery on deferred payment basis.

  • Bill facility for purchase of raw materials and for sale of finished goods.

  • Composite loans (term loans plus working capital) up to Rs 25 lakh.

Q.What are the margins applicable?

A. For requirements up to Rs 25,000, no margins are involved. For limits ranging from Rs 25,000 to Rs 5 crore, the margin is set at 20 per cent.

For credit limits above Rs 5 crore, a 25 per cent margin may be applied.