Master Circular – Lending to Micro, Small & Medium Enterprises (MSME) Sector
The Reserve Bank of India (RBI) has issued a master circular outlining the guidelines for lending to Micro, Small, and Medium Enterprises (MSME) sector.
Definition of MSMEs: The circular defines MSMEs based on investment in plant and machinery for manufacturing enterprises and investment in equipment for service enterprises.
Direct Finance: The circular outlines the various areas where direct finance can be provided to MSMEs, including:
- Manufacturing enterprises
- Loans for food and agro processing
- Service enterprises
- Export credit
- Khadi and Village Industries Sector (KVI)
Indirect Finance: The circular also mentions indirect finance, which includes support services such as training, marketing, and infrastructure development.
Targets for Lending: The circular sets targets for lending to Micro and Small enterprises (MSE) sector by Domestic Commercial Banks and Foreign Banks operating in India. At least 60% of MSE advances should go to the micro enterprises.
Scheme of Small Enterprises Financial Centres (SEFCs): The circular outlines the scheme of SEFCs, which aims to provide financial support to small enterprises.
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Download: Master Circular – Lending to Micro, Small & Medium Enterprises (MSME) Sector