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RBI Clarification on new MSME definition

CSLalit Rajput
RBI Clarifies New MSME Definitions: Micro, Small, and Medium Enterprises Reclassified with Updated Investment and Turnover Limits The Reserve Bank of India issued a notification clarifying the new definitions for Micro, Small, and Medium Enterprises (MSMEs) effective from July 1, 2020. Micro enterprises are defined by investments not exceeding one crore rupees and turnover not exceeding five crore rupees. Small enterprises have investment limits up to ten crore rupees and turnover up to fifty crore rupees. Medium enterprises have investment limits up to fifty crore rupees and turnover up to two hundred and fifty crore rupees. Existing MSME classifications and documentation remain valid until June 30, 2022, as per RBI's clarification. (AI Summary)

RBI Clarification on new MSME definition

Reserve Bank of India (RBI) vide Circular No. RBI/2022-23/52 FIDD. MSME & NFS.BC.No.7/06.02.31/2022-23 dated 19th May, 2022 has issued notification related to “New Definition of Micro, Small and Medium Enterprises - Clarification”.

New Definitions – Enterprises-  (effective from 01.07.2020):

Type (s) of Entity

Criteria

Micro enterprises

where the investment in Plant and Machinery or Equipment does not exceed one crore rupees and turnover does not exceed five crore rupees;

Small enterprises

where the investment in Plant and Machinery or Equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees;

Medium enterprises

where the investment in Plant and Machinery or Equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees

Previous Circulars:

circulars FIDD.MSME & NFS.BC.No.3/06.02.31/2020-21 dated July 2, 2020, FIDD.MSME & NFS.BC.No.4/06.02.31/2020-21 dated August 21, 2020 and FIDD.MSME & NFS.BC.No.16/06.02.31/2021-22 dated February 18, 2022, regarding revised criteria for classification of Micro, Small and Medium Enterprises.

RBI clarifications:

It has been clarified by the RBI that:

  • the existing Entrepreneurs Memorandum (EM) Part II and Udyog Aadhaar Memorandum (UAM) of the MSMEs obtained till June 30, 2020 shall remain valid till June 30, 2022 for classification as MSMEs; and
  • the validity of documents obtained in terms of O.M. No.12(4)/ 2017-SME dated March 8, 2017 (RBI Circular FIDD.MSME & NFS.BC.No.10/06.02.31/2017-18 dated July 13, 2017 – Click Here), for classification of MSMEs upto June 30, 2020, has been extended upto June 30, 2022.

Source: Click Here

FEMA - Foreign Exchange Management
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