Micro, Small & Medium Enterprises

Definition of MSME [Micro, Small & Medium Enterprises] as per The Micro, Small & Medium Enterprises Development Act 2006.

An enterprise is micro Enterprise if investment in plant and machinery does not exceed Rs.25 lacs if engaged in manufacturing or production of goods AND investment in equipment does not exceed Rs.10 lacs, if engaged in providing of services.

Micro Units may get collateral free loans upto Rs.10 lacs  and covered under Credit Guarantee Fund for Micro Units (CGFMU). Read this.

Small enterprise is an enterprise having investment in plant and machinery above Rs.25 lacs but upto Rs.5 crores in case of manufacturing concern and investment in Equipments above Rs.10 lacs but upto Rs.2 crores.

Micro & Small Enterprises may get collateral free loan under CGTMSE Scheme. Read this article about CGTMSE, explained in simple terms.

Medium enterprise is an enterprise having investment in plant and machinery above Rs.5 crores but upto Rs.10 crores in case of manufacturing concern and investment in Equipments above Rs.2 crores but upto Rs.5 crores in case of service enterprise.

[Investment in plant and machinery and Equipments is the original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide its notification No.S.O. 1722(E) dated October 5, 2006.]

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Priority Sector Guidelines for MSME sector

Bank loans to Micro, Small and Medium Enterprises, for both manufacturing and service sectors are eligible to be classified under the priority sector as per the following norms:

Manufacturing Enterprises

Micro, Small and Medium Enterprises engaged in the manufacture or production of goods to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951 and as notified by the Government from time to time.

Service Enterprises

Bank loans up to Rs.5 crore per unit to Micro and Small Enterprises and ₹ 10 crore to Medium Enterprises engaged in providing or rendering of services.

Khadi and Village Industries Sector (KVI)

All loans to units in the KVI sector are eligible for classification under the sub-target of 7 percent /7.5 percent prescribed for Micro Enterprises under priority sector.

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Other Finance to MSMEs

(i) Loans to entities involved in assisting the decentralized sector in the supply of inputs to and marketing of outputs of artisans, village and cottage industries.

(ii) Loans to co-operatives of producers in the decentralized sector viz. artisans, village and cottage industries.

(iii) Loans sanctioned by banks to MFIs for on-lending to MSME sector.

(iv) General Credit Cards (including Artisan Credit Card, Laghu Udyami Card, Swarojgar Credit Card, and Weaver’s Card etc. in existence and catering to the non-farm entrepreneurial credit needs of individuals).

(v) Overdrafts upto Rs.5,000/- under Pradhan Mantri Jan DhanYojana (PMJDY)

(vi) Outstanding deposits with SIDBI and MUDRA Ltd. on account of priority sector shortfall.