PHDCCI leadership met RBI Governor today to put forth a few industry issues and suggestions with respect to inconsistent treatment of discrepancies in Letter of Credit (LC) documents by issuing banks and unfair trade practices being carried out by Rating Agencies. “Banks sometimes refuse payment even when discrepancies are minor and have been formally waived by the LC applicant. This undermines the reliability of Letters of Credit as payment instruments. Arbitrary use of discretion by banks in accepting or rejecting discrepancy waivers creates uncertainty for suppliers and exporters”, said Mr Rajeev Juneja, President, PHDCCI.
“We request RBI to issue clear operational guidelines requiring banks to honour LC documents where discrepancies have been formally waived by the applicant, except in cases involving fraud or material risk. RBI may also prescribe uniform procedures and standardised documentation practices for discrepancy waivers, ensuring consistency across banks”, he added.
“Another important issue is to increase the Credit to MSMEs through NBFCs limit and treat it as indirect finance. RBI restored the classification of credit to MSMEs through the NBFC under Priority Sector, but only partially to the extent of Rs. 20 lacs per borrower. With the revision in classification criteria of MSMEs announced in the budget 2025, almost 99 percent of enterprises in India are now MSMEs with their turnover limit increasing up to 500 crores, therefore, this Rs. 20 lakh loan limit is insufficient”, said Dr Ranjeet Mehta, CEO & Secretary General, PHDCCI.
“Considering the issue, it is earnestly desired that the credit given by banks to NBFCs for the purpose of on-lending to Micro, Small and Medium Enterprises should be treated as indirect finance to MSMEs eligible for classification under the Priority Sector lending of banks and the ceiling of Rs. 20 lacs per borrower should be removed altogether or should be increased to at least Rs. 1 crore per borrower which would be equivalent to just the minimum working capital required by a Micro Enterprise with turnover up to Rs. 10.0 crore as per the revised definition”, he added.
The Chamber also highlighted the challenges in implementing the requirement for regulated entities to use 1600 series numbers for service and transactional calls and 1400 series numbers for promotional calls. It is noted that many customers tend to ignore such calls, as they are often perceived as telemarketing calls, which reduces the effectiveness of genuine business communication.
The Chamber also requested RBI to look into the following issues as well which are hindering the smooth functioning of the Industry viz., Introducing uniformity and digitalization in documentation. Unfair Trade Practices by Rating Agencies, demanding rating fee for future even when the rating is not required, is absolutely unfair trade practice which needs to be stopped, issuing of Credit Cards to Micro Enterprises as ‘MSME Credit Card’ to distinguish them from the other credit cards, and also bringing in the uniformity in the application process, eligibility criteria and the procedure for issuing the cards.
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