Global Trade Alert

On 18 November 2013, the Reserve Bank of India decided to provide a refinance facility of Rs. 5,000 crore (USD 795 million) to the Small Industries Development Bank of India (SIDBI) to provide direct liquidity support to finance receivables, including export receivables, of micro, small and medium sized enterprises through SIDBI and other selected financial intermediaries.
 
On 25 November 2013, the RBI issued a notification stating that apart from the above medium manufacturing enterprises, and micro, small and medium service sector enterprises will be treated as a priority sector under this scheme.
 
The facility is available for receivables outstanding as of 14 November 2013 at the 14-day repo rate of interest and a period of 90 days, with a roll over option. The facility will be available until 13 November 2014.
 
The justification for this facility was that the slowing down of the economy has resulted in a liquidity tightness for such enterprises, and considering their employment intensity and contribution to exports such a facility eases stress.