TaxTMI 
TaxTMI 
Credit flow to Micro, Small and Medium Enterprises Sector
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....tment of the above legislation, current SSI/ tiny industries definition may continue. Units with investment in plant and machinery in excess of SSI limit and up to Rs. 10 crore may be treated as Medium Enterprises (ME)." 2. The Government of India has since enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 on June 16, 2006 which was notified on October 2, 2006. Consistent with the notification of the Micro, Small and Medium Enterprises Development (MSMED) Act 2006, the definition of micro, small and medium enterprises engaged in manufacturing or production and providing or rendering of services is being modified and is required to be implemented by the banks alongwith other policy measures with immediate effect. 3. Definition of Micro, Small and Medium Enterprises (a) Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below: i) A micro enterprise is an enterprise where investment in plant and machinery [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 (copy enclosed)]....
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....e. 4. Compilation of separate data for each category of enterprises Based on the above definition you are requested to compile data separately for each category of enterprises in the prescribed format (copy enclosed) from the quarter ended September 30, 2007, for onward transmission to the Government of India. 5. Progressive guidelines/instructions to banks on micro, small and medium enterprises Reserve Bank of India have been issuing guidelines/instructions to banks from time to time to ensure timely and smooth flow of credit to such enterprises, to minimize the incidence of sickness among them and enhance the competitiveness of such enterprises which has been incorporated in our Master Circular on SME lending (RPCD. PLNFS. BC. No. 2/ 06.02.31/ 2006-07 dated July 1, 2006). The Boards of banks may review the existing guidelines/instructions and formulate a comprehensive and liberal policy in respect of loans to micro, small and medium (MSME) sector and adopt the same at the earliest. 6. Delayed payment to micro and small enterprises The existing provisions of the Interest on Delayed Payment Act, 1998 to Small Scale and Ancillary Industrial Undertakings, have been ....
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....; 4 Total Micro and Small Enterprises (MSE sector) Amount (total of amounts for items 2a, 2b, 3a and 3b 5 Advances up to Rs 5 lakh Amount 6 A Share of credit to Micro Enterprises in total credit to MSE sector Per cent(share of amounts under items 2a and 2b to 4) B Share of credit to MSE sector in NBC Per cent (share of item 4 to item 1) 7 Medium Enterprises A Manufacturing sector Accounts Amount B Services sector Accounts Amount In case of non-availability of data please indicate N.A. Note: manufacturing sector refers to enterprises engaged in manufacture or production, processing or preservation of goods. Services sector refers to enterprises engaged in providing or rendering services, Annexure....
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....d assets, excluding land and building will be given benefits of small scale sector. For computation of value of fixed assets, the original price paid by the original owner will be considered irrespective of the price paid by subsequent owners. Para. 3(b) Enterprises engaged in providing or rendering of services and whose investment in equipment (original cost excluding land and building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006) . These will include small road & water transport operators (owning a fleet of vehicles not exceeding ten vehicles), retail trade (with credit limits not exceeding Rs.10 lakh), small business (whose original cost price of the equipment used for the purpose of business does not exceed Rs.20 lakh) and professional & self employed persons (whose borrowing limits do not exceed Rs.10 lakh of which not more than Rs.2 lakh should be for working capital requirements except in case of professionally qualified medical practitioners setting up of practice in semi-urban and rural areas, the borrowing limits should not exceed Rs.15 lakh with a sub-ceiling of Rs.3 lakh for....
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....nks. (iv) The rate of interest to be charged by banks on such term finance/ loans/ lines of credit will be in conformity with the directives on interest rates issued by the Reserve Bank from time to time. 2.5.5 Credit provided by banks to KVIC under the scheme for provision of credit to KVIC by consortium of banks for lending to viable Khadi and Village Industrial Units. 2.5.6 Funds provided by commercial banks to SIDBI/SFCs by way of rediscounting of bills of SSIs which are originally discounted by a commercial bank and rediscounted by SIDBI/SFCs will be eligible for inclusion under the priority sector as indirect finance to SSI. 2.5.7 Subscription to bonds issued by NABARD with the objective of financing exclusively non-farm sector. However, the investments made by banks in such bonds issued by NABARD, shall not be eligible for classification under priority sector lending with effect from April 1, 2007. 2.5.8 (i) Financing of NBFCs or other intermediaries for on-lending to the tiny sector. (ii) All new loans granted by banks to NBFCs and other intermediaries for on-lending to SSI sector with effect from November 11, 2003. 2.5.9 Deposits placed with SIDBI b....