New Delhi, February 6: With an aim to incentivise new credit flow to the micro, small, and medium enterprise (MSME) borrowers, all the Scheduled Commercial Banks will be allowed to deduct credit disbursed to 'New MSME borrowers'. The banks have been allowed to deduct the credit from their net demand and time liabilities (NDTL) for calculation of the Cash Reserve Ratio (CRR).

The new development comes as part of the additional measures announced by RBI Governor Shaktikanta Das after the MPC meeting. The 'New MSME borrowers' have been defined as those who have not availed any credit facilities from the banking system as on January 1, 2021.

The exemption will be available for exposures up to Rs 25 lakh per borrower for credit extended up to the fortnight ending October 1, 2021. According to reports, details of the scheme would be spelt out separately by the Reserve Bank of India (RBI).