Banking · Priority Sector Lending and Loan Operations
A mid-sized manufacturing company with an annual turnover of twelve crore rupees has requested an ad-hoc facility over its sanctioned Cash Credit (CC) limit. It is not registered on the Udyam portal. According to current RBI regulatory standards, what is the major operational implication for the bank regarding this non-registration?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The company becomes legally ineligible for any type of working capital extension or credit renewal.
- 2The bank cannot classify this loan under the Priority Sector Lending (PSL) target for Micro, Small, and Medium Enterprises (MSMEs).✓
- 3The debt-equity ratio must be immediately brought down to 1:1 before considering the request.
- 4The account must be immediately flagged as a Special Mention Account (SMA-2) due to incomplete documentation.
Correct answer
The bank cannot classify this loan under the Priority Sector Lending (PSL) target for Micro, Small, and Medium Enterprises (MSMEs).
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