Mumbai, June 5 -- The Reserve Bank of India (RBI) is in favour of scrapping the risk weight on loans given by banks to small and medium enterprises under the government's '3 trillion loan guarantee scheme, a top official at RBI said. The Union finance ministry had proposed the scrapping as part of the operational guidelines of the scheme following the announcement by finance minister Nirmala Sitharaman.
Currently, loans to medium, small and micro enterprises (MSMEs) carry a risk weight of 20%.
The move, which comes as yet another nudge for lenders to rescue the struggling sector that employs millions of Indians, follows the government agreeing to fully guarantee these loans in case of default. According to the official cited above, who sp...