Uttar Bihar Gramin Bank MSE Loan Policy & Rehabilitation Policy for MSE

Running a micro, small, or medium enterprise is tough work. Credit shouldn’t be. This friendly guide turns the Uttar Bihar Gramin Bank (UBGB) MSE Loan Policy and Rehabilitation Policy into everyday language so you know what qualifies as an MSE, what the bank looks for, what support exists when things get bumpy, and how to get financed with minimal stress.

What this policy is trying to do (Objectives)

UBGB’s MSE policy has a simple promise: quick, fair, and transparent banking for small businesses. That includes:

• Faster access to credit with clear timelines
• Hassle-free processing and realistic documentation
• Straightforward definitions of what counts as an MSE
• Consistent appraisal so good proposals don’t get stuck
• Compliance with Government and RBI norms
• Cluster support (serving groups of similar businesses together)
• Encouraging CGTMSE coverage so you can borrow with little/no collateral
• Following BCSBI’s Code (fair banking practices)
• Special focus on first-time and young entrepreneurs

Who counts as an MSME (Definition)

As shared in this policy:

• Manufacturing
  • Micro: up to ₹25 lakh investment in plant & machinery
  • Small: ₹25 lakh–₹5 crore
  • Medium: ₹5–₹10 crore
• Services
  • Micro: up to ₹10 lakh investment in equipment
  • Small: ₹10 lakh–₹2 crore
  • Medium: ₹2–₹5 crore

(Note: Regulations evolve. Treat your branch’s current circular as the final word.)

Who and what the policy covers (Scope & Coverage)

All kinds of Micro and Small enterprises—manufacturing or services—are covered for credit, plus rehabilitation support if your unit becomes stressed/sick but remains viable.

How the bank assesses your need (Guidelines on MSE Finance)

UBGB sizes loans to match your business reality:

• Working capital: Based on business model, seasonality, stock/receivables cycle, and sales pattern
  • Seasonal units: Higher limits during peak season; leaner in off-season
  • Non-seasonal: Steady limits matched to normal operating cycle
• Term loans: Evaluated on technical feasibility (machinery, capacity, tech) and financial viability (cash flow, payback, DSCR)

What you pledge (Security Norms)

• Collateral-free up to ₹10 lakh is encouraged wherever feasible
• The bank aims to cover eligible MSE loans under CGTMSE, reducing the need for hard collateral
• Above that, security depends on ticket size, risk, and scheme guidelines

Financing clusters (Cluster-Based Approach)

Serving many similar units in one location—like weavers, foundries, food processors—cuts costs and speeds service. UBGB follows a “4C” approach:

• Customer focus
• Cost control
• Cross-sell where useful (payments, insurance)
• Credit risk management at the cluster level

Common ground rules you can expect (Lending Guidelines)

• Time-bound processing with clear communication
• Simple, bank-specific financial norms (like minimum margins, DSCR, and turnover levels)
• A bias for working capital that matches your actual cycle, not arbitrary limits

If your unit turns sick (Rehabilitation of Sick MSEs)

Businesses hit rough patches. UBGB assesses whether the unit is viable or potentially viable and may support with:

• Rescheduling/extension of term loan repayment
• Reworking interest as per policy
• Additional need-based working capital
• Linking you to relevant government schemes for revival

Who watches the big picture (State-Level & Empowered Committees)

• SLIIC: State-level body of government, banks, and MSME associations that monitors constraints and coordinates solutions
• Empowered Committee on MSMEs: Reviews the flow of credit, addresses bottlenecks, and steers corrective actions at the regional level

When debt needs re-stitching (Restructuring Mechanism)

For viable/potentially viable MSMEs facing stress:

• Debt restructuring may be considered to align outflows with cash inflows
• The goal: restore health, not just push out dues

Modernizing on subsidy (CLCSS)

The Credit Linked Capital Subsidy Scheme helps eligible MSMEs upgrade technology. If you’re investing in better machines or processes, ask the branch about eligibility, caps, and documentation.

Fair banking practices (BCSBI Code)

UBGB follows the Bank’s Commitment to MSEs—meaning clear fees, fair treatment, and transparent decisions.

Borrowing without heavy collateral (CGTMSE)

The Credit Guarantee Fund Trust for Micro & Small Enterprises covers a significant share of the bank’s risk so you don’t have to over-mortgage assets. Banks are encouraged to route eligible loans through CGTMSE.

Keeping accounts healthy (Monitoring of MSE Credit)

Expect periodic reviews of your stock, receivables, sales, and compliance. If there’s slippage, the bank will flag early and work with you on solutions.

The loan policy backbone (Loan Policy for MSE Sector)

UBGB’s lending is anchored to RBI/Government guidelines and updates. As policies evolve, sanction terms reflect the latest rules.

What doesn’t count in investment limits (Exclusions)

Certain items are excluded when calculating investment in plant/machinery or equipment (per Ministry notifications). Your branch will apply current official lists.

How your working capital is calculated (Assessment Methodologies)

UBGB uses two broad approaches:

1. Sales/Turnover-based method: Limit sized as a % of projected or evidenced sales (common for smaller units with clean bank statements)
2. Traditional assessment: Looks at inventory, receivables, payables, and your operating cycle to compute MPBF (Maximum Permissible Bank Finance)

For construction/seasonal/project-style businesses, the Cash Budget Method is used: you submit cash inflows/outflows by month/quarter; limits follow your peaks and troughs.

Use of funds and discipline (Diversion of Funds)

Investing to grow your core business is encouraged—as long as it doesn’t stress liquidity or violate sanction terms. Funds must be used for the purpose sanctioned; deviations can hurt renewal and pricing.

Cash Budget Method—what it means for you

You provide a simple, time-phased cash plan:

• Inflow: sales receipts, advances, subsidies
• Outflow: raw materials, wages, rent, utilities, loan EMIs, taxes
  The bank tests whether your plan is realistic, then aligns drawing power to that plan—especially useful where receipts are seasonal or milestone-based.

Practical tips to get a “yes” faster

• Show your cycle clearly: Days in inventory and receivables, seasonality, and any anchor customers
• Keep statements clean: Route sales/collections through the UBGB account you’re applying with
• Right-size the limit: Borrow what your cash flows can service; oversizing invites stress
• Ask for CGTMSE if collateral is thin; it often speeds sanction
• Document tech upgrades if you’re seeking CLCSS subsidy—quotes/specs help
• Respond quickly to queries—most delays happen after appraisal begins

What to bring (Typical checklist)

• KYC of proprietors/partners/directors
• Business proof (Udyam/MSME registration, GST if applicable)
• Financials/ITRs & bank statements (as per ticket size)
• Projected sales & working capital cycle (or a simple cash budget)
• Existing loan details and latest stock/receivables statements
• Quotations for machinery (for term loans)
• CGTMSE/CLCSS forms if you’re opting in

In one line: what UBGB promises

A clear, time-bound, and support-first approach to MSE credit—with collateral-free options up to ₹10 lakh where feasible, CGTMSE coverage, cluster focus, and structured rehabilitation if your unit hits a rough patch. If you’re ready with a clean, realistic plan, UBGB is ready to finance it.