The Reserve Bank of India has asked banks to mandatorily acknowledge all loan applications, submitted either manually or online, by micro, small and medium enterprise (MSME) borrowers. The central bank has reiterated the above directive following complaints from industry associations/ chambers that banks are not acknowledging loan applications.

Banks have been asked to ensure that a running serial number is recorded on the loan application form as well as the acknowledgement receipt. Further, banks are encouraged to start a central registration for loan applications, the RBI said. The same technology may be used for online submission of loan applications to enable online tracking.

Better design

The RBI emphasised that loan application forms have to be so designed that all documents required to be executed by the borrower on sanction of the loan form a part of it. The forms should have a checklist of the documents required to be submitted by the applicant and the formalities to be completed, post-sanction.

For micro enterprises, simplified application-cum-sanction form, printed in regional language, should be introduced for loans up to Rs 1 crore.

Banks should consider introducing a committee approach for sanction of new loans as also rehabilitation cases. This will improve the quality of decision as the members' collective wisdom will be utilised, especially while taking decision on loan applications for greenfield projects in the sector or rehabilitation proposals.

The RBI said banks should give it an ‘action taken report' on compliance with these directives by the end of this month.

> kram@thehindu.co.in

Published on January 4, 2012