Master Direction for Lending to MSME Sector
The Reserve Bank of India has issued a master direction for lending to Micro, Small, and Medium Enterprises (MSME) sector.
The direction applies to all commercial banks, including regional rural banks, small finance banks, and local area banks.
Definitions and Clarifications
The direction defines MSMEs based on the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
Targets and Sub-targets
Banks are required to achieve targets and sub-targets for lending to the MSME sector, with a focus on micro and small enterprises.
Guidelines for Lending
The direction outlines guidelines for lending to MSMEs, including:
- Collateral requirements
- Composite loan facilities
- General Credit Card (GCC) facilities
- Streamlining credit flow to micro and small enterprises
- Debt restructuring mechanisms
- Framework for revival and rehabilitation of MSMEs
- Monitoring credit growth to the MSE sector
Institutional Arrangements
The direction outlines institutional arrangements for implementing the guidelines, including the role of specialized MSME branches and cells.
The direction aims to facilitate timely and adequate credit flow to MSMEs and promote their growth and development.
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