What changed
The Government of India, via Gazette Notification S.O. 420(E) dated March 28, 2005, de-reserved 108 items from the list of products exclusively reserved for manufacture in the small-scale sector. As a result, the total number of reserved items decreased to 506 as of that date.
What it means for you
Banks and lenders must note that these 108 items can now be manufactured by larger enterprises, potentially altering credit risk profiles and market dynamics for SSI borrowers. Lending to SSIs may need recalibration as competition increases in these de-reserved segments. This change could impact working capital and term loan assessments for units previously protected.
What you must do
- Update internal databases and credit policies to reflect the revised list of 506 reserved SSI items.
- Review existing SSI loan portfolios to identify exposure to de-reserved items and reassess risk.
- Communicate the de-reservation to branch managers and credit officers for informed lending decisions.
- Monitor market shifts in de-reserved sectors to adjust collateral and repayment expectations.
Who it affects
All Scheduled Commercial Banks including RRBs, Small-scale industrial borrowers, Credit and risk management teams, Branch managers handling SSI lending
What is the effective date of this de-reservation?
The de-reservation of 108 items is effective from March 28, 2005, as per the Government of India Gazette Notification S.O. 420(E).
How many items remain reserved for exclusive SSI manufacture after this change?
As of March 28, 2005, the number of items reserved for exclusive manufacture in the small-scale sector stands at 506.
Do banks need to take any immediate action on existing loans to SSIs producing de-reserved items?
Yes, banks should review their loan portfolios for exposure to these 108 items and reassess credit risk, as larger enterprises can now compete in these segments.