Micro, Small & Medium Enterprises (MSME) Sector Guidelines
The Reserve Bank of India has issued guidelines for lending to the MSME sector, as per the MSMED Act, 2006.
Definition of MSMEs: Manufacturing enterprises with investment in plant and machinery up to ₹25 lakh, ₹5 crore, and ₹10 crore are classified as micro, small, and medium enterprises, respectively. Service enterprises with investment in equipment up to ₹10 lakh, ₹2 crore, and ₹5 crore are classified as micro, small, and medium enterprises, respectively.
Priority Sector Guidelines: The guidelines cover manufacturing enterprises, service enterprises, Khadi and Village Industries Sector (KVI), and other finance to MSMEs.
Lending Targets: Domestic Commercial Banks and Foreign Banks operating in India are required to achieve lending targets of 7% by March 2016 and 7.5% by March 2017.
Common Guidelines: The guidelines include issue of acknowledgement of loan applications, collateral, composite loan, specialised MSME branches, delayed payment, and revised guidelines for rehabilitation of sick micro and small enterprises.
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Download: Master Circular – Lending to Micro, Small & Medium Enterprises (MSME) Sector