What is the Definition of Micro, Small & Medium Enterprises ?
- In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified according to their investment in Plant and Machinery (Manufacturing Enterprises) & in Equipment (Service Enterprises) :
||Investment in Plant & Machinery Up-to Rs.25Lac
||Investment in Equipment Up-to Rs.10Lac
||Investment in Plant & Machinery Above Rs.25Lac and up-to Rs.5Crore
||Investment in Equipment Above Rs.10Lac and up-to Rs.2Crore
||Investment in Plant & Machinery Above Rs.5
Crore and up-to Rs.10 Crore
|Investment in Equipment Above Rs.2Crore and up-to Rs.5Crore
- The Micro and Small (Service) Enterprises shall include Small Road & Water Transport Operators, Small Business, Professional & Self-Employed Persons, and Retail Trade i.e. advances granted to Retail Traders dealing in essential commodities (Fair Price Shops) and Private Retail traders with credit limit not exceeding Rs.20.00Lac, and other service enterprises, as per the definition under MSMED Act.
What is the definition of Manufacturing Enterprises & Service Enterprises ?
- Manufacturing Enterprises: The enterprises engaged in the manufacture or production, processing, preservation and packaging of goods and are defined in terms of investment (original cost) in Plant & Machinery.
- Service Enterprises: The enterprises engaged in providing or rendering of services and are defined in terms of investment (original cost) in equipment excluding land and bldg. and furniture and fittings not directly related to services rendered.
Are there Specialized Branches for lending to the MSMEs ?
Yes, Bank has categorised specialized MSME Branches in identified clusters / centres with preponderance of small enterprises to enable the entrepreneurs to have easy access to the Bank Credit (List of Specialised MSME Branches is available on our Website).
Whether Term Loan and Working Capital can be given by the Bank ?
Yes, both the facilities i.e. Term Loan and Working Capital are available in the Bank
Is there any Upper Limit for Bank loan to Manufacturing Enterprise or Service Enterprise ?
There is no upper limit of for Bank loan to Manufacturing Enterprise. But there is upper limit for Bank loan up to Rs.5.00crores per borrower in Micro and Small Enterprise units engaged in providing services and defined in terms of investment in equipment.
What is “Primary Security” for MSE Loans ?
"Primary security" in respect of a MSE loan shall mean the assets created out of the credit facility so extended and/or existing unencumbered assets which are directly associated with the project or business for which the credit facility has been extended.
Whether Collateral Security / Third Party Guarantee is required for MSE Loans ?
- No Collateral Security / Third Party Guarantee is required in the case of loans up-to Rs.10Lac to units in the MSE sector.
- Further, on the basis of good track record and financial position of units, Bank may increase the limit of dispensation of Collateral Security / Third Party Guarantee requirement for loans up-to Rs.25 lakh with the approval of the Appropriate Authority.
- No Collateral Security or Third Party Guarantee is required for loans up to Rs.1.00Crore; the loan will be covered under CGTMSE.
- The other Loan Accounts which are not eligible under CGTMSE, Bank may stipulate Collateral Security/Guarantees as per Bank’s Loan Policy guidelines