RBI Master Circular on Lending to Micro, Small & Medium Enterprises (MSME) Sector

RBI/2011-12/83
RPCD.SME & NFS. BC. No. 09/06.02.31/ 2011-12

July 1, 2011

The Chairman/Managing Director/
Chief Executive Officer

All Scheduled Commercial Banks
(excluding Regional Rural Banks)

Dear Sir

Master Circular – Lending to Micro, Small & Medium Enterprises (MSME) Sector

As you are aware, the Reserve Bank of India has, from time to time, issued a number of guidelines/instructions/directives to banks in the matters relating to lending to Micro, Small & Medium Enterprises Sector. To enable the banks to have current instructions at one place, a Master Circular incorporating the existing guidelines/instructions/directives on the subject has been prepared and is appended. This Master Circular consolidates the instructions issued by the RBI up to June 30, 2011, which are listed in the Appendix, to theextentthey deal with the MSME sector lending by commercial banks.

2. Please acknowledge receipt.

Yours faithfully

(C.D. Srinivasan)
Chief General Manager


SECTION – I

Micro, Small & Medium Enterprises Development (MSMED) Act, 2006

The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 on June 16, 2006 which was notified on October 2, 2006. With the enactment of MSMED Act 2006, the paradigm shift that has taken place is the inclusion of the services sector in the definition of Micro, Small & Medium enterprises, apart from extending the scope to medium enterprises. The MSMED Act, 2006 has modified the definition of micro, small and medium enterprises engaged in manufacturing or production and providing or rendering of services. The Reserve Bank has notified the changes to all scheduled commercial banks. Further, the definition, as per the Act, has been adopted for purposes of bank credit vide RBI circular ref. RPCD.PLNFS. BC.No.63/ 06.02.31/ 2006-07 dated April 4, 2007.

1  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 does not exceed Rs. 25 lakh;

ii.            A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore; and

iii.            A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.

In case of the above enterprises, investment in plant and machinery 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 (Annex I).

(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) are specified below.

i.            A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh;

ii.            A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore; and

iii.            A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.

These will include small road & water transport operators, small business, retail trade, professional & self-employed persons and other service enterprises

Lending by banks to medium enterprises will not be included for the purpose of reckoning of advances under the priority sector.

iv.            Since the MSMED Act, 2006 does not provide for clubbing of investments of different enterprises set up by same person / company for the purpose of classification as Micro, Small and Medium enterprises, the Gazette Notification No. S.O.2 (E) dated January 1, 1993 on clubbing of investments of two or more enterprises under the same ownership for the purpose of classification of industrial undertakings as SSI has been rescinded vide GOI Notification No. S.O. 563 (E) dated February 27, 2009.

1.1 Khadi and Village Industries Sector (KVI)

All advances granted to units in the KVI sector, irrespective of their size of operations, location and amount of original investment in plant and machinery will be covered under priority sector advances and will be eligible for consideration under the sub-target (60 per cent) of the micro enterprises segment within the MSE Sector.

1.2 Indirect Finance

1.2.1 Persons involved in assisting the decentralised sector in the supply of inputs and marketing of outputs of artisans, village and cottage industries.

1.2.2 Advances to cooperatives of producers in the decentralised sector viz. artisans, village and cottage industries.

1.2.3 Loans granted by banks to Micro Finance Institutions on, or after, April 1, 2011 for on-lending to micro and small enterprises (manufacturing as well as services) subject to the compliance of guidelines specified in Circular RPCD. CO. Plan. BC. 66/04.09.01/ 2010-11 dated May 3, 2011 on ‘Bank loans to Micro Finance Institutions (MFIs) Priority Sector Status’.

SECTION – II

Certain types of funds deployment eligible as priority sector advances

2.1 Investments

2.1.1 Securitised Assets

Investments made by banks in securitised assets, representing loans to various categories of priority sector, shall be eligible for classification under respective categories of priority sector (direct or indirect) depending on the underlying assets, provided the securitised assets are originated by banks and eligible financial institutions and fulfill the Reserve Bank of India guidelines on securitisation. This would mean that the bank’s investments in the above categories of securitised assets shall be eligible for classification under the respective categories of priority sector only if the securitised advances were eligible  to be classified as priority sector advances before their securitisation.

2.1.2 Outright purchases of any loan asset eligible to be categorised under priority sector, shall be eligible for classification under the respective categories of priority sector (direct or indirect), provided the loans purchased are eligible to be categorised under priority sector; the loan assets are purchased (after due diligence and at fair value) from banks and eligible financial institutions, without any recourse to the seller; and the eligible loan assets are not disposed of, other than by way of repayment, within a period of six months from the date of purchase.

2.1.3 Investments by banks in Inter Bank Participation Certificates (IBPCs), on a risk sharing basis, shall be eligible for classification under respective categories of priority sector, provided the underlying assets are eligible to be categorised under the respective categories of priority sector and are held for at least 180 days from the date of investment.

2.2 Scheme of Small Enterprises Financial Centres (SEFCs):

As per announcement made by the Governor in the Annual Policy Statement 2005-06, a scheme for strategic alliance between branches of banks and SIDBI located in clusters, named as Small Enterprises Financial Centres has been formulated in consultation with the Ministry of SSI and Banking Division, Ministry of Finance, Government of India, SIDBI, IBA and select banks and circulated to all scheduled commercial banks on May 20,  2005 for implementation. SIDBI has so far executed MoU with 15 banks so far (Bank of India, UCO Bank, YES Bank, Bank of Baroda, Oriental Bank of Commerce, Punjab National Bank, Dena Bank, Andhra Bank, Indian Bank, Corporation Bank, IDBI Bank, Indian Overseas Bank, Union Bank of India, State Bank of India and Federal Bank). List of MSME  clusters covered by existing SIDBI branches is furnised in Annex II.

SECTION – III

Targets for priority sector lending by Domestic Commercial Banks

3.1 Targets for Domestic Commercial Banks

3.1.1 The domestic commercial banks are expected to enlarge credit to priority sector and ensure that priority sector advances (which include the micro and small enterprises (MSE) sector) constitute 40 per cent of Adjusted Net Bank Credit (ANBC) or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher.

3.1.2 In terms of the recommendations of the Prime Minister™s Task Force on MSMEs, banks are advised to achieve a 20 per cent year-on-year growth in credit to micro and small enterprises and a 10 per cent annual growth in the number of micro enterprise accounts.

3.1.3 In order to ensure that sufficient credit is available to micro enterprises within the MSE sector, banks should ensure that:

(a)  40 per cent of the total advances to MSE sector should go to micro (manufacturing) enterprises having investment in plant and machinery up to Rs. 5 lakh and micro (service) enterprises having investment in equipment up to Rs. 2 lakh;

(b)  20 per cent of the total advances to MSE sector should go to micro (manufacturing) enterprises with investment in plant and machinery above Rs. 5 lakh and up to Rs. 25 lakh, and micro (service) enterprises with investment in equipment above Rs. 2 lakh and up to Rs. 10 lakh. Thus, 60 per cent of MSE advances should go to the micro enterprises.

(c)  While banks are advised to achieve the 60% target as above, in terms of the recommendations of the Prime Minister™s Task Force, the allocation of 60% of the MSE advances to the micro enterprises is to be achieved in stages viz. 50% in the year 2010-11, 55% in the year 2011-12 and 60% in the year 2012-13.

3.2 Targets for Foreign Banks

3.2.1 Foreign banks are expected to enlarge credit to priority sector and ensure that priority sector advances (which includes the MSE sector) constitute 32 per cent of Adjusted Net Bank Credit (ANBC) or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher.

3.2.2 Within the overall target of 32 per cent to be achieved by foreign banks, the advances to MSE sector should not be less than 10 per cent of the adjusted net bank credit (ANBC) or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher.

3.2.3 In terms of the recommendations of the Prime Minister™s Task Force on MSMEs, banks are advised to achieve a 20 per cent year-on-year growth in credit to micro and small enterprises and a 10 per cent annual growth in the number of micro enterprise accounts.

3.2.4 In order to ensure that sufficient credit is available to micro enterprises within the MSE sector, banks should ensure that:

(a)  40 per cent of the total advances to MSE sector should go to micro (manufacturing) enterprises having investment in plant and machinery up to Rs. 5 lakh and micro (service) enterprises having investment in equipment up to Rs. 2 lakh;

(b)  20 per cent of the total advances to MSE sector should go to micro (manufacturing) enterprises with investment in plant and machinery above Rs. 5 lakh and up to Rs. 25 lakh, and micro (service) enterprises with investment in equipment above Rs. 2 lakh and up to Rs. 10 lakh. Thus, 60 per cent of MSE advances should go to the micro enterprises.

(c)  While banks are advised to achieve the 60% target as above, in terms of the recommendations of the Prime Minister™s Task Force the allocation of 60% of the MSE advances to the micro enterprises is to be achieved in stages viz. 50% in the year 2010-11, 55% in the year 2011-12 and 60% in the year 2012-13.

3.3 Deposit by Foreign Banks with SIDBI or Funds with other Financial Institutions, as specified by the Reserve Bank

3.3.1 The foreign banks having shortfall in lending to stipulated priority sector lending target / sub-targets will be required to contribute to Funds to be set up with Small Industries Development Bank of India (SIDBI) or with other Financial Institutions, for such other purpose as may be stipulated by Reserve Bank of India from time to time.

3.3.2 For the purpose of such allocation, the achievement level of priority sector lending as on the last reporting Friday of March of the immediately preceding financial year will be taken into account (i.e. For allocation in Funds with SIDBI or any other Financial Institutions in the year 2011-12, the achievement level of priority sector lending target / sub-targets as on the last reporting Friday of March 2011 will be taken into account).

3.3.3 The corpus of Funds shall be decided by Government of India / Reserve Bank of India on a year-to-year basis. The tenor of the deposits shall be for a period of three years or as decided by Reserve Bank from time to time. The contribution required to be made by foreign banks would not be more than the amount of shortfall in priority sector lending target / sub-targets of the foreign banks.

3.3.4 The concerned foreign banks will be called upon by SIDBI / or such other Financial Institutions may be decided by Reserve Bank, as and when funds are required by them, after giving one month’s notice.

3.3.5 The interest rates on foreign banks’ contribution, period of deposits, etc. shall be fixed by Reserve Bank of India from time to time.

3.4  Non-achievement of priority sector targets and sub-targets will be taken into account while granting regulatory clearances/approvals for various purposes.

[ANBC or credit equivalent of Off-Balance Sheet Exposures (as defined by Department of Banking Operations and Development of Reserve Bank of India from time to time) will be computed with reference to the outstanding as on March 31 of the previous year. For this purpose, outstanding FCNR (B) and NRNR deposits balances will no longer be deducted for computation of ANBC for priority sector lending purposes. For the purpose of priority sector lending, ANBC denotes NBC plus investments made by banks in non-SLR bonds held in HTM category. Investments made by banks in the Recapitalization Bonds floated by Government of India will not be taken into account for the purpose of calculation of ANBC. Existing and fresh investments, by banks in non-SLR bonds held in HTM category will be taken into account for the purpose.Deposits placed by banks with NABARD/SIDBI, as the case may be, in lieu of non-achievement of priority sector lending targets/sub-targets, though shown under Schedule 8 ‘Investments’ in the Balance Sheet at item I (vi) ‘Others’, will not be treated as investment in non-SLR bonds held under HTM category.For the purpose of calculation of credit equivalent of off-balance sheet exposures, banks may use current exposure method. Inter-bank exposures will not be taken into account for the purpose of priority sector lending targets/sub-targets.]

SECTION – IV

Common Guidelines / Instructions for Lending to MSME Sector

4.1 Disposal of Applications

All loan applications for MSE units upto a credit limit of Rs. 25,000/- should be disposed of within 2 weeks and those upto Rs. 5 lakh within 4 weeks provided , the loan applications are complete in all respects and accompanied by a ” check list”.

4.2 Collateral

Banks are mandated not to accept collateral security in the case of loans upto Rs.10 lakh extended to units in the MSE sector. Banks are also advised to extend collateral-free loans upto Rs. 10 lakh to all units financed under the Prime Minister Employment Generation Programme of KVIC.

Banks may, on the basis of good track record and financial position of the MSE units, increase the limit of dispensation of collateral requirement for loans up to Rs.25 lakh (with the approval of the appropriate authority).

Banks are advised to strongly encourage their branch level functionaries to avail of the Credit Guarantee Scheme cover, including making performance in this regard a criterion in the evaluation of their field staff.

4.3 Composite loan

A composite loan limit of Rs.1 crore can be sanctioned by banks to enable the MSE entrepreneurs to avail of their working capital and term loan requirement through Single Window.

4.4 Specialised MSME branches

Public sector banks have been advised to open at least one specialised branch in each district. Further, banks have been permitted to categorise their MSME general banking branches having 60% or more of their advances to MSME sector in order to encourage them to open more specialised MSME branches for providing better service to this sector as a whole. As per the policy package announced by the Government of India for stepping up credit to MSME sector, the public sector banks will ensure specialized MSME branches in identified clusters/centres with preponderance of small enterprises to enable the entrepreneurs to have easy access to the bank credit and to equip bank personnel to develop requisite expertise. The existing specialised SSI branches may  also be redesignated as MSME branches. Though their core competence will be utilized for extending finance and other services to MSME sector, they will have operational flexibility to extend finance/render other services to other sectors/borrowers.

4.5 Delayed Payment

Under the Amendment Act, 1998 of Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertakings, penal provisions have been incorporated to take care of delayed payments to MSME units. After the enactment of the Micro, Small and Medium Enterprises Development (MSMED), Act 2006, the existing provisions of the Interest on Delayed Payment Act, 1998 to Small Scale and Ancillary Industrial Undertakings, have been strengthened as under:

(i) In case the buyer to make payment on or before the date agreed on between him and the supplier in writing or, in case of no agreement before the appointed day. The agreement between seller and buyer shall not exceed more than 45 days.

(ii) In case the buyer fails to make payment of the amount to the supplier, he shall be liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or, on the date agreed on, at three times of the Bank Rate notified by Reserve Bank.

(iii) For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the interest as advised at (ii) above.

(iv) In case of dispute with regard to any amount due, a reference shall be made to the Micro and Small Enterprises Facilitation Council, constituted by the respective State Government.

Further, banks have been advised to fix sub-limits within the overall working capital limits to the large borrowers specifically for meeting the payment obligation in respect of purchases from MSMEs.

4.6 Guidelines on rehabilitation of sick SSI (now MSE) units (based on Kohli Working Group recommendations)

As per the definition, a unit is considered as sick when any of the borrowal account of the unit remains substandard for more than 6 months or there is erosion in the net worth due to accumulated cash losses to the extent of 50% of its net worth during the previous accounting year and the unit has been in commercial production for at least two years.  The criteria will enable banks to detect sickness at an early stage and facilitate corrective action for revival of the unit.  As per the guidelines, the rehabilitation package should be fully implemented within six months from the date the unit is declared as potentially viable/viable.  During this six months period of identifying and implementing rehabilitation package banks/FIs are required to do holding operation which will allow the sick unit to draw funds from the cash credit account at least to the extent of deposit of sale proceeds

Following are broad parameters for grant of relief and concessions for revival of potentially viable sick SSI units:

(i) Interest on Working Capital: Interest 1.5% below the prevailing fixed/prime lending rate, wherever applicable
(ii) Funded Interest Term Loan: Interest Free
(iii) Working Capital Term Loan : Interest to be charged 1.5% below the prevailing fixed / prime lending rate , wherever applicable
(iv) Term Loan: Concessions in the interest to be given not more than 2 % (not more than 3 % in the case of tiny / decentralised sector units) below the document rate.
(v) Contingency Loan Assistance: The Concessional rate allowed for Working Capital

A circular was issued to all scheduled commercial banks vide RPCD.No. PLNFS.BC.57/06.04.01/2001-02 dated January 16, 2002 thereby advising implementation of the Kohli Committee Recommendations.

4.7 State Level Inter Institutional Committee

In order to deal with the problems of co-ordination for rehabilitation of sick micro and small units, State Level Inter-Institutional Committees (SLIICs) have been set up in all the States.  The meetings of these Committees are convened by Regional Offices of RBI and presided over by the Secretary, Industry of the concerned State Government.  It provides a useful forum for adequate interfacing between the State Government Officials and State Level Institutions on the one side and the term lending institutions and banks on the other.  It closely monitors timely sanction of working capital to units which have been provided term loans by SFCs, implementation of special schemes such as Margin Money Scheme of State Government and reviews general problems faced by industries and sickness in MSE sector based on the data furnished by banks.  Among others, the representatives of the local state level MSE associations are invited to the meetings of SLIIC which are held quarterly. A sub-committee of SLIIC looks into the problems of individual sick MSE unit and submits its recommendations to the forum of SLIIC for consideration.

4.8 Empowered Committee on MSMEs

As part of the  announcement made by the Union Finance Minister,  at the Regional Offices of Reserve Bank of India, Empowered Committees on MSMEs have been constituted under the Chairmanship of the Regional Directors with the representatives of SLBC Convenor, senior level officers from two banks having predominant share in MSME financing in the state, representative of SIDBI Regional Office, the Director of Industries of the State Government, one or two senior level representatives from the MSME/SSI Associations in the state, and a senior level officer from SFC/SIDC as members. The Committee will meet periodically and review the progress in MSME financing as also rehabilitation of sick Micro, Small and Medium units. It will also coordinate with other banks/financial institutions and the state government in removing bottlenecks, if any, to ensure smooth flow of credit to the sector. The committees may decide the need to have similar committees at cluster/district levels.

4.9 Debt Restructuring Mechanism for  MSMEs

(i) As part of announcement made by the Hon’ble Finance Minister for stepping up credit to small and medium enterprises, a debt restructuring mechanism for units in MSME sector has been formulated by Department of Banking Operations & Development of Reserve Bank of India and advised all commercial banks vide circular DBOD. BP. BC. No. 34 / 21.04.132/ 2005-06 dated September 8, 2005. These detailed guidelines have been issued to ensure restructuring of debt of all eligible small and medium enterprises. These guidelines would be applicable to the following entities, which are viable or potentially viable:

(a)  All non-corporate MSMEs irrespective of the level of dues to banks.

(b)  All corporate MSMEs, which are enjoying banking facilities from a single bank, irrespective of the level of dues to the bank.

(c)  All corporate MSMEs, which have funded and non-funded outstanding up to Rs.10 crore under multiple/ consortium banking arrangement.

(d)  Accounts involving willful default, fraud and malfeasance will not be eligible for restructuring under these guidelines.

(e)  Accounts classified by banks as Loss Assets will not be eligible for restructuring.

For all corporate including MSMEs, which have funded and non-funded outstanding of Rs.10 crore and above, Department of Banking Operations & Development has issued separate guidelines on Corporate Debt Restructuring Mechanism vide circular DBOD. No.BP.BC.45/ 21.04. 132/2005-06 dated November 10, 2005.

Prudential Guidelines on MSME Debt Restructuring by banks have been formulated and advised to all commercial banks by Department of Banking Operations & Development vide circular DBOD.No.BP.BC.No.37 /21.04.132/2008-09 dated August 27, 2008.

(ii)  In the light of the recommendations of the Working Group on Rehabilitation of Sick MSEs (Chairman: Dr. K.C. Chakrabarty), all commercial banks were advised vide our circular ref. RPCD. SME & NFS.BC.No. 102/06.04.01/ 2008-09 dated May 4, 2009 to:

(a)  put in place loan policies governing extension of credit facilities, Restructuring/Rehabilitation policy for revival of potentially viable sick units/enterprises and  non- discretionary One Time Settlement scheme for recovery of non-performing loans for the MSE sector, with the approval of the Board of Directors and

(b)  implement recommendations with regard to timely and adequate flow of credit to the MSE sector.

(iii) Banks have been advised to give wide publicity to the One Time settlement scheme implemented by them, by placing it on the bank™s website and through other possible modes of dissemination. They may allow reasonable time to the borrowers to submit the application and also make payment of the dues in order to extend the benefits of the scheme to eligible borrowers.

4.10  Cluster Approach

(i) 60 clusters have been identified by the Ministry of Micro, Small and Medium Enterprises, Government of India for focused development of Small Enterprises sector. All SLBC Convenor banks have been advised to incorporate in their Annual Credit Plans, the credit requirement in the clusters identified by the Ministry of Micro, Small and Medium Enterprises, Government of India.

As per Ganguly Committee recommendations banks have been advised that a full-service approach to cater to the diverse needs of the MSE sector may be achieved through extending banking services to recognized MSE clusters by adopting a 4-C approach  namely, Customer focus, Cost control, Cross sell and Contain risk. A cluster based approach to lending may be more beneficial:

(a)  in dealing with well-defined and recognized groups;

(b)  availability of appropriate information for risk assessment and

(c)  monitoring by the lending institutions.

Clusters may be identified based on factors such as trade record, competitiveness and growth prospects and/or other cluster specific data.

(ii) As per announcement made by the Governor in paragraph 157 of the Annual Policy Statement 2007-08, all SLBC Convenor banks have been advised vide letter RPCD.PLNFS.No. 10416/06.02.31/ 2006-07 dated May 8, 2007 to review their institutional arrangements for delivering credit to the MSME sector, especially in 388 clusters identified by United Nations Industrial Development Organisation (UNIDO) spread over 21 states in various parts of the country. A list of SME clusters as identified by UNIDO has been furnished in Annex III.

(iii) The Ministry of Micro, Small and Medium Enterprises has approved a list of clusters under the Scheme of Fund for Regeneration of Traditional Industries (SFURTI) and Micro and Small Enterprises Cluster Development Programme (MSE-CDP) located in 121 Minority Concentration Districts. Accordingly, appropriate measures have been taken to improve the credit flow to the identified clusters of micro and small entrepreneurs from the Minorities Communities residing in the minority concentrated districts of the country.

(iv) In terms of recommendations of the Prime Minister™s Task Force on MSMEs banks should open more MSE focused branch offices at different MSE clusters which can also act as Counselling Centres for MSEs. Each lead bank of a district may adopt at least one MSE cluster.

4.11 Government of India, Ministry of Micro, Small and Medium Enterprises has conveyed their approval for continuation of the Credit Linked Capital Subsidy Scheme (CLSS) for Technology Upgradation of Micro and Small Enterprises from X Plan to XI Plan (2007-12) subject to the following terms and conditions:

(i) Ceiling on the loan under the scheme is Rs. 1 crore.

(ii)  The rate of subsidy is 15% for all units of micro and small enterprises up to loan ceiling at Sr. No. (i) above.

(iii) Calculation of admissible subsidy will be done with reference to the purchase price of plant and machinery instead of term loan disbursed to the beneficiary unit.

(iv) SIDBI and NABARD will continue to be implementing agencies of the scheme.

4.12  Committees on flow of Credit to MSE sector

4.12.1   Report of the High Level Committee on Credit to SSI (now MSE) (Kapur Committee)

Reserve Bank of India had appointed a one-man High Level Committee headed by Shri S L Kapur, (IAS, Retd.), Former Secretary, Government of India, Ministry of Industry to suggest measures for improving the delivery system and simplification of procedures for credit to SSI sector. The Committee made 126 recommendations covering wide range of areas pertaining to financing of SSI sector. These recommendations have been examined by the RBI and it has been decided to accept 88 recommendations which include the following important recommendations:

(i) Delegation of more powers to branch managers to grant ad-hoc limits;
(ii) Simplification of application forms;
(iii) Freedom to banks to decide their own norms for assessment of credit requirements;
(iv) Opening of more specialised SSI branches;
(v) Enhancement in the limit for composite loans to Rs. 5 lakh.(since enhanced to Rs.1 crore);
(vi) Strengthening the recovery mechanism;
(vii) Banks to pay more attention to the backward states;
(viii) Special programmes for training branch managers for appraising small projects;
(ix) Banks to make customers grievance machinery more transparent and simplify the procedures for handling complaints and monitoring thereof.

A circular was issued to all scheduled commercial banks vide RPCD.No. PLNFS.BC.22/06.02.31/98-99 dated August 28, 1998 thereby advising implementation of the Kapur Committee Recommendations.

4.12.2 Report of the Committee to Examine the Adequacy of Institutional Credit to SSI Sector(now MSE) and Related Aspects (Nayak Committee)

The Committee was constituted by Reserve Bank of India in December 1991 under the Chairmanship of Shri P. R. Nayak, the then Deputy Governor to examine the issues confronting SSIs(now MSE) in the matter of obtaining finance. The Committee submitted its report in 1992.  All the major recommendations of the Committee have been accepted and the banks have been inter-alia advised to:

(i) give preference to village industries, tiny industries and other small scale units in that order, while meeting the credit requirements of the small scale sector;

(ii)  grant working capital credit limits to SSI (now MSE) units computed  on the basis of minimum 20% of their estimated annual turnover whose credit limit in individual cases is upto Rs.2 crore [ since raised to Rs.5 crore ];

(iii) prepare annual credit budget on the `bottom-up™ basis to ensure that the legitimate requirements of SSI (now MSE) sector are met in full;

(iv) extend ˜Single Window Scheme™ of SIDBI to all districts to meet the financial requirements (both working capital and term loan) of SSIs(now MSE);

(v)  ensure that there should not be any delay in sanctioning and disbursal of credit.  In case of rejection/curtailment of credit limit of the loan proposal, a reference to higher authorities should be made;

(vi) not to insist on compulsory deposit as a `quid pro-quo™ for sanctioning the credit;

(vii)  open specialised SSI (now MSE) bank branches or convert those branches which have a fairly large number of SSI (now MSE) borrowal accounts, into specialised SSI (now MSE) branches;

(viii) identify sick SSI (now MSE) units and take urgent action to put them on nursing programmes;

(ix) standardise loan application forms for SSI (now MSE) borrowers; and

(x)  impart training to staff working at specialised branches to bring about attitudinal change in them.

A circular was issued to all scheduled commercial banks vide RPCD. PLNFS/ BC. No. 61/06.0262/ 2000-01 dated March 2, 2001 thereby advising implementation of the Nayak Committee Recommendations.

4.12.3 Report of the Working Group on Flow of Credit to SSI (now MSE) Sector (Ganguly Committee)

As per the announcement made by the Governor, Reserve Bank of India, in the Mid-Term Review of the Monetary and Credit Policy 2003-2004, a Working Group on Flow of Credit to SSI sector was constituted under the Chairmanship of Dr. A S Ganguly.

The Committee made 31 recommendations covering wide range of areas pertaining to financing of SSI sector. The recommendations pertaining to RBI and banks have been examined and RBI has accepted 8 recommendations so far and commended to banks for implementation vide circular RPCD.PLNFS.BC.28/06.02.31(WG)/ 2004-05 dated September 4, 2004 which are as under:

(i) adoption of cluster based approach for financing MSME  sector;

(ii)  sponsoring specific projects as well as widely publicising successful working models of NGOs by Lead Banks which service small and tiny industries and individual entrepreneurs;

(iii) sanctioning of higher working capital limits by banks operating in the North East region to  SSIs (now MSE) , based on their commercial judgment due to the peculiar situation of hilly terrain and frequent floods causing hindrance in the transportation system;

(iv)  exploring new instruments by banks for promoting rural industry and to improve the flow of credit to rural artisans, rural industries and rural entrepreneurs, and

(v)  revision of tenure as also interest rate structure of deposits kept by foreign banks with SIDBI for their shortfall in priority sector lending.

4.13.1 Policy Package for Stepping up Credit to Small and Medium Enterprises- Announcements made by the Union Finance Minister on August 10, 2005

The Hon’ble Finance Minister, Government of India had announced on August 10, 2005, a Policy Package for stepping up credit flow to Small and Medium enterprises. Some of the salient features of the policy package are as under:

  • Definition of Small and Medium Enterprises (MSMEs)
  • Fixing of self-targets for financing to MSME sector by banks
  • Measures to rationalize the cost of loans to MSME sector
  • Measures to increase the outreach of formal credit to the MSME sector
  • Cluster based approach for financing MSME sector
  • Constitution of Empowered Committees for MSMEs in the Regional Offices of Reserve Bank
  • Steps to rationalize the cost of loans to MSME sector by adopting a transparent rating system with cost of credit being linked to the credit rating of enterprise.
  • Banks to consider taking advantage of Credit Appraisal & Rating Tool (CART), Risk Assessment Model (RAM) and the comprehensive rating model for risk assessment of MSME proposals, developed by SIDBI for reduction of their transaction costs.
  • Banks to consider the ratings of MSE units carried out through reputed credit rating agencies under the Credit Rating Scheme introduced by National Small Industries Corporation.
  • Wider dissemination and easy accessibility of the policy guidelines formulated by Boards of banks as well as instructions/guidelines issued by Reserve Bank by displaying them on the respective banks™ web sites as well as web site of SIDBI and also prominently displaying them at the bank branches.

4.13.2 Major Instructions issued to Public Sector banks subsequent to the policy announcements

On the basis of the Policy Package as announced by the Union Finance Minister, some of the major instructions issued by Reserve Bank to all public sector banks were as under:

  • Public sector banks were advised to fix their own targets for funding SMEs in order to achieve a minimum 20% year on year growth in credit to SMEs. The objective is to double the flow of credit from Rs. 67,600 crore in 2004-05 to Rs. 1,35,200 crore to the SME sector by 2009-10, i.e. within a period of 5 years.
  • Public sector banks were advised to follow a transparent rating system with cost of credit being linked to the credit rating of the enterprise.
  • All banks, may make concerted efforts to provide credit cover on an average to at least 5 new small/ medium enterprises at each of their semi-urban/ urban branches per year.
  • The banks may ensure specialized MSME branches in identified clusters/ centres with preponderance of small Enterprises to enable the entrepreneurs to have easy access to the bank credit.

(The circulars issued by Reserve Bank in this regard are vide RPCD.PLNFS. BC.No.31/ 06.02.31/200506 dated August 19, 2005 and RPCD.PLNFS. BC.No.35/ 06.02.31 / 2005 -06 dated August 25, 2005)

4.14  Banking Codes and Standard Board of India (BCSBI)

The Banking Codes and Standard Board of India (BCSBI) has formulated a Code of Bank’s Commitment to Micro and Small Enterprises. This is a voluntary Code, which sets minimum standards of banking practices for banks to follow when they are dealing with Micro and Small Enterprises (MSEs) as defined in the Micro Small and Medium Enterprises Development (MSMED) Act, 2006. It provides protection to MSE and explains how banks are expected to deal with MSE for their day to-day operations and in times of financial difficulty.

The Code does not replace or supersede regulatory or supervisory instructions issued by the Reserve Bank of India (RBI) and  banks will comply with such instructions /directions issued by the RBI from time to time.

4.14.1 Objectives of the BCSBI Code

The Code has been developed to

(a) Give a positive thrust to the MSE sector by providing easy access to efficient banking services.

(b) Promote good and fair banking practices by setting minimum standards in dealing with MSE.

(c) Increase transparency so that a better understanding of what can reasonably expected of the services.

(d) Improve understanding of business through effective communication.

(e)  Encourage market forces, through competition, to achieve higher operating standards.

(f) Promote a fair and cordial relationship between MSE and banks and also ensure timely and quick response to banking needs.

(g)  Foster confidence in the banking system.

The complete text of the Code is available at the BCSBI’s website (ww.bcsbi.org.in)

4.15 Prime Minister™s Task Force on Micro, Small and Medium Enterprises

A High Level Task Force was constituted by the Government of India (Chairman: Shri T K A Nair) to consider various issues raised by Micro, Small and Medium Enterprises (MSMEs).The Task Force recommended several measures having a bearing on the functioning of MSMEs, viz., credit, marketing, labour, exit policy, infrastructure/technology/skill development and taxation. The comprehensive recommendations cover measures that need immediate action as well as medium term institutional measures along with legal and regulatory structures and recommendations for North-Eastern States and Jammu & Kashmir.

Banks are urged to keep in view the recommendations made by the Task Force and take effective steps to increase the flow of credit to the MSE sector, particularly to the micro enterprises.

A circular was issued to all scheduled commercial banks vide RPCD. SME & NFS BC. No. 90/06.02.31/2009-10 dated June 29, 2010 advising implementation of the recommendations of the Prime Minister™s task Force on MSMEs.

The report of the Prime Minister™s Task Force on Micro, Small and Medium Enterprises is available on the website of Ministry of Micro, Small and Medium Enterprises (msme.gov.in)

4.16 Working Group to Review the Credit Guarantee Scheme for Micro and Small Enterprises

A Working Group was constituted by the Reserve Bank of India under the Chairmanship of Shri V.K. Sharma, Executive Director, to review the working of the Credit Guarantee Scheme of CGTMSE and suggest measures to enhance its usage and facilitate increased flow of collateral free loans to MSEs.

The recommendations of the Working Group included, inter alia, mandatory doubling of the limit for collateral free loans to micro and small enterprises (MSEs) sector from Rs.5 lakh to Rs.10 lakh and enjoining upon the Chief Executive Officers of banks to strongly encourage the branch level functionaries to avail of the CGS cover and making performance in this regard a criterion in the evaluation of their field staff, etc. have been advised to all banks.

A circular was issued to all scheduled commercial banks vide RPCD.SME&NFS.BC.No.79/06.02.31/2009-10 dated May 6, 2010 mandating them not to accept collateral security in the case of loans upto Rs 10 lakh extended to units in the MSE sector and advising them to strongly encourage their branch level functionaries to avail of the CGS cover, including making performance in this regard a criterion in the evaluation of their field staff.

Necessary action is being taken to implement the other recommendations of the Group which would result in enhanced usage of the Guarantee Scheme and facilitate increase in quality and quantity of credit to the presently included, as well as excluded, MSEs, leading eventually, to sustainable inclusive growth.


Annex I

MINISTRY OF SMALL SCALE INDUSTRIES
NOTIFICATION
New Delhi, the 5th October, 2006

S.O. 1722(E) In  exercise of the powers conferred by sub-section (1) of 2006) herein referred to as the said Act, the Central Government specifies the following items, the cost of which shall be excluded while calculating the investment in plant and machinery in the case of the enterprises mentioned in Section 7(1)(a) of the said Act, namely:

i.            equipment such as tools, jigs, dyes, moulds and spare parts for maintenance and the cost of consumables stores;

ii.            installation of plant and machinery;

iii.            research and development equipment and pollution controlled equipment

iv.            power generation set and extra transformer installed by the enterprise as per regulations of the State Electricity Board;

v.            bank charges and service charges paid to the National Small Industries Corporation or the State Small Industries Corporation;

vi.            procurement or installation of cables, wiring, bus bars, electrical control panels (not mounded on individual machines), oil circuit breakers or miniature circuit breakers which are necessarily to be used for providing electrical power to the plant and machinery or for safety measures;

vii.            gas producers plants;

viii.            transportation charges ( excluding sales-tax or value added tax and excise duty) for indigenous machinery from the place of the manufacture to the site of the enterprise;

ix.            charges paid for technical know-how for erection of plant and machinery;

x.            such storage tanks which store raw material and finished produces and are not linked with the manufacturing process; and

xi.            firefighting equipment.

2.           While calculating the investment in plant and machinery refer to paragraph 1, the original price thereof, irrespective of whether the plant and machinery are new or second handed, shall be taken into account provided that in the case of imported machinery, the following shall be included in calculating the value, namely;

i.            Import duty (excluding miscellaneous expenses such as transportation from the port to the site of the factory, demurrage paid at the port);

ii.            Shipping charges;

iii.            Customs clearance charges; and

iv.            Sales tax or value added tax.

(F.No.4(1)/2006-MSME- Policy)
JAWHAR SIRCAR, Addl. Secy.


Annex II

LIST OF MSME CLUSTERS  COVERED BY EXISTING SIDBI BRANCHES

 

List of MSME Clusters in India (identified by UNIDO)
S. No. State District Location Product
1 Andhra Pradesh Anantpur Rayadurg Readymade Garments
2 Andhra Pradesh Anantpur Chitradurg Jeans Garments
3 Andhra Pradesh Chittoor Nagari Powerloom
4 Andhra Pradesh Chittoor Ventimalta, Srikalahasti, Chundur Brass Utensils
5 Andhra Pradesh East Godavari East Godavari Rice Mills
6 Andhra Pradesh East Godavari Rajahmundry Graphite Crucibles
7 Andhra Pradesh East Godavari East Godavari Coir & Coir Products
8 Andhra Pradesh East Godavari Rajahmundry Aluminium Utensils
9 Andhra Pradesh East Godavari & West Godavari East Godavari(EG) & West Godavari Refractory Products
10 Andhra Pradesh Guntur Guntur Powerloom
11 Andhra Pradesh Guntur Guntur Lime Calcination
12 Andhra Pradesh Guntur Macherla Wooden Furniture
13 Andhra Pradesh Hyderabad Hyderabad Ceilling Fan
14 Andhra Pradesh Hyderabad Hyderabad Electronic Goods
15 Andhra Pradesh Hyderabad Hyderabad Pharmaceuticals- Bulk Drugs
16 Andhra Pradesh Hyderabad Musheerabad Leather Tanning
17 Andhra Pradesh Hyderabad Hyderabad Hand Pumpsets
18 Andhra Pradesh Hyderabad Hyderabad Foundry
19 Andhra Pradesh Karimnagar Sirsilla Powerloom
20 Andhra Pradesh Krishna Machilipatnam Gold Plating & Imitation Jewellery
21 Andhra Pradesh Krishna Vijayawada Rice Mills
22 Andhra Pradesh Krishna Chundur, Kavadiguda, Charminar,Vijayawada Steel Furniture
23 Andhra Pradesh Kurnool Adoni Oil Mills
24 Andhra Pradesh Kurnool Kurnool Artificial Diamonds
25 Andhra Pradesh Kurnool, Cuddapah Kurnool(Banaganapalle, Bethamcheria,Kolimigundla) Cuddapah Polished Slabs
26 Andhra Pradesh Prakasam Markapuram Stone Slate
27 Andhra Pradesh Ranga Reddy Balanagar, Jeedimetla & Kukatpally Machine Tools
28 Andhra Pradesh Srikakulam Palasa Cashew Processing
29 Andhra Pradesh Visakhapatnam,East Godavari Visakhapatnam, Kakinada Marine Foods
30 Andhra Pradesh Warangal Warangal Powerloom
31 Andhra Pradesh Warangal Warangal Brassware
32 Andhra Pradesh West Godavari West Godavari Rice Mills
33 Bihar Begusarai Barauni Engineering & Fabrication
34 Bihar Muzzafarpur Muzzafarpur Food Products
35 Bihar Patna Patna Brass and German Silver Utensils
36 Chhattisgarh Durg, Rajnandgaon, Raipur Durg, Rajnandgaon, Raipur Steel Re-rolling
37 Chhattisgarh Durg, Raipur Durg, Raipur Castings & Metal Fabrication
38 Delhi North West Delhi Wazirpur, Badli Stainless Steel Utensils & Cutlery
39 Delhi South & West Delhi Okhla, Mayapuri Chemicals
40 Delhi West & South Naraina & Okhla Electrical Engineering Equipment
41 Delhi West & South Naraina & Okhla Electronic Goods
42 Delhi North Delhi Lawrence Road Food Products
43 Delhi South Delhi Okhla, Wazirpur Flatted Factories Complex Leather Products
44 Delhi South, West Delhi Okhla,Mayapuri, Anand Parbat Mechanical Engineering Equipment
45 Delhi West,South, East Delhi Naraina,Okhla, Patparganj Packaging Material
46 Delhi West & South Naraina & Okhla Paper Products
47 Delhi West & South Naraina Udyog Nagar & Okhla Plastic Products
48 Delhi West, South, North West Naraina,Okhla,Shivaji Marg,Najafgarh Road Rubber Products
49 Delhi North East Delhi Shahadara & Vishwasnagar Wire Drawing
50 Delhi West & North West Mayapuri & Wazirpur Metal Fabrication
51 Delhi West & North East Kirtinagar & Tilak Nagar Furniture
52 Delhi North West Delhi Wazirpur Electro Plating
53 Delhi South,West,North West & North West Okhla, Mayapuri,Naraina, Wazirpur Badli & G.T. Karnal Road Auto Components
54 Delhi North East Delhi, East Delhi & South Shahdara,Gandhinagar, Okhla & Maidangari Hosiery
55 Delhi South & North East Okhla & Shahdara Readymade Garments
56 Delhi South Delhi Okhla Sanitary Fittings
57 Gujarat Ahmedabad Ahmedabad Pharmaceuticals
58 Gujarat Ahmedabad Ahmedabad Dyes & Intermediates
59 Gujarat Ahmedabad Ahmedabad Moulded Plastic Products
60 Gujarat Ahmedabad Ahmedabad Readymade Garments
61 Gujarat Ahmedabad Ahmedabad Textile Machinery Parts
62 Gujarat Ahmedabad Ahmedabad, Dhanduka Diamond Processing
63 Gujarat Ahmedabad Ahmedabad Machine Tools
64 Gujarat Ahmedabad Ahmedabad Castings & Forging
65 Gujarat Ahmedabad Ahmedabad Steel Utensils
66 Gujarat Ahmedabad Ahmedabad Wood Product & Furniture
67 Gujarat Ahmedabad Ahmedabad Paper Products
68 Gujarat Ahmedabad Ahmedabad Leather Footware
69 Gujarat Ahmedabad Ahmedabad Washing Powder & Soap
70 Gujarat Ahmedabad Ahmedabad Marble Slabs
71 Gujarat Ahmedabad Ahmedabad Power Driven Pumps
72 Gujarat Ahmedabad Ahmedabad Electronic Goods
73 Gujarat Ahmedabad Ahmedabad Auto Parts
74 Gujarat Amreli Savarkundla Weights & Measures
75 Gujarat Amrelli, Juna Garh, Rajkot Amrelli Juna Garh Rajkot belt Oil Mills Machinery
76 Gujarat Bhavnagar Alang Ship Breaking
77 Gujarat Bhavnagar Bhavnagar Steel Re-rolling
78 Gujarat Bhavnagar Bhavnagar Machine Tools
79 Gujarat Bhavnagar Bhavnagar Plastic Processing
80 Gujarat Bhavnagar Bhavnagar Diamond Processing
81 Gujarat Gandhinagar Kalol Powerloom
82 Gujarat Jamnagar Jamnagar Brass Parts
83 Gujarat Jamnagar Jamnagar Wood Product & Furniture
84 Gujarat Mahesana Vijapur Cotton Cloth Weaving
85 Gujarat Rajkot Dhoraji, Gondal, Rajkot Oil Mills
86 Gujarat Rajkot Jetpur Textile Printing
87 Gujarat Rajkot Morvi & Wankaner Flooring Tiles(Clay)
88 Gujarat Rajkot Morvi Wall Clocks
89 Gujarat Rajkot Rajkot Diesel Engines
90 Gujarat Rajkot Rajkot Electric Motors
91 Gujarat Rajkot Rajkot Castings & Forging
92 Gujarat Rajkot Rajkot Machine Tools
93 Gujarat Rajkot Rajkot Diamond Processing
94 Gujarat Surat Surat, Choryasi Diamond Processing
95 Gujarat Surat Surat Powerloom
96 Gujarat Surat Surat Wood Product & Furniture
97 Gujarat Surat Surat Textile Machinery
98 Gujarat Surendranagar Surendranagar & Thangadh Ceramics
99 Gujarat Surendranagar Chotila Sanitary Fittings
100 Gujarat Vadodara Vadodara Pharmaceuticals- Bulk Drugs
101 Gujarat Vadodara Vadodara Plastic Processing
102 Gujarat Vadodara Vadodara Wood Product & Furniture
103 Gujarat Valsad Pardi Dyes & Intermediates
104 Gujarat Valsad/
Bharuch
Vapi/Ankleshwar Chemicals
105 Gujarat Valsad/
Bharuch
Vapi/Ankleshwar Pharmaceuticals- Bulk Drugs
106 Goa South Goa Margao Pharmaceutical
107 Haryana Ambala Ambala Mixies & Grinders
108 Haryana Ambala Ambala Scientific Instruments
109 Haryana Bhiwani Bhiwani Powerloom
110 Haryana Bhiwani Bhiwani Stone Crushing
111 Haryana Faridabad Faridabad Auto Components
112 Haryana Faridabad Faridabad Engineering Cluster
113 Haryana Faridabad Faridabad Stone Crushing
114 Haryana Gurgaon Gurgaon Auto Components
115 Haryana Gurgaon Gurgaon Electronic Goods
116 Haryana Gurgaon Gurgaon Electrical Engineering Equipment
117 Haryana Gurgaon Gurgaon Readymade Garments
118 Haryana Gurgaon Gurgaon Mechanical Engineering Equipment
119 Haryana Kaithal Kaithal Rice Mills
120 Haryana Karnal Karnal Agricultural Implements
121 Haryana Karnal, Kurukshetra,
Panipat
Karnal,Kurukshetra,
Panipat
Rice Mills
122 Haryana Panchkula Pinjore Engineering Equipment
123 Haryana Panchkula Panchkula Stone Crushing
124 Haryana Panipat Panipat Powerloom
125 Haryana Panipat Panipat Shoddy Yarn
126 Haryana Panipat Samalkha Foundry
127 Haryana Panipat Panipat Cotton Spinning
128 Haryana Rohtak Rohtak Nuts/ Bolts
129 Haryana Yamuna Nagar Yamuna Nagar Plywood/Board/Blackboard
130 Haryana Yamunanagar Jagadhri Utensils
131 Himachal Pradesh Kullu & Sirmaur Kullu & Sirmaur Food Processing
132 Himachal Pradesh Kangra Damtal Stone Crushing
133 Himachal Pradesh Solan Parwanoo Engineering Equipment
134 Jammu & Kashmir Anantnag Anantnag Cricket Bat
135 Jammu & Kashmir Jammu Jammu Steel Re-rolling
136 Jammu & Kashmir Jammu/ Kathua Jammu/ Kathua Oil Mills
137 Jammu & Kashmir Jammu/ Kathua Jammu/ Kathua Rice Mills
138 Jammu & Kashmir Srinagar Srinagar Timber Joinery/ Furniture
139 Jharkhand Sarikela-Kharsawan Adityapur Auto Components
140 Jharkhand East Singhbhum Jamshedpur Engineering & Fabrication
141 Jharkhand Bokaro Bokaro Engineering & Fabrication
142 Karnataka Bangalore Bangalore Machine Tools
143 Karnataka Bangalore Bangalore Powerloom
144 Karnataka Bangalore Bangalore Electronic Goods
145 Karnataka Bangalore Bangalore Readymade Garments
146 Karnataka Bangalore Bangalore Light Engineering
147 Karnataka Bangalore Bangalore Leather Products
148 Karnataka Belgaum Belgaum Foundry
149 Karnataka Belgaum Belgaum Powerloom
150 Karnataka Bellary Bellary Jeans Garments
151 Karnataka Bijapur Bijapur Oil Mills
152 Karnataka Dharwad Hubli, Dharwad Agriculture Implements and Tractor Trailer
153 Karnataka Gadag Gadag Betgeri Powerloom
154 Karnataka Gulburga Gulburga Gadagh belt Dal Mills
155 Karnataka Hassan Arasikara Coir & Coir Products
156 Karnataka Mysore Mysore Food Products
157 Karnataka Mysore Mysore Silk
158 Karnataka Raichur Raichur Leather Products
159 Karnataka Shimoga Shimoga Rice Mills
160 Karnataka South Kannada Mangalore Food Products
161 Kerala Alappuzha Alappuzha Coir & Coir Products
162 Kerala Ernakulam Ernakulam Rubber Products
163 Kerala Ernakulam Ernakulam Powerloom
164 Kerala Ernakulam Kochi Sea Food Processing
165 Kerala Kannur Kannur Powerloom
166 Kerala Kollam Kollam Coir & Coir Products
167 Kerala Kottayam Kottayam Rubber Products
168 Kerala Mallappuram Mallappuram Powerloom
169 Kerala Palakkad Palakkad Powerloom
170 Kerala Faizlure Powerloom
171 Maharashtra Ahmednagar Ahmednagar Auto Components
172 Maharashtra Akola Akola Oil Mills (Cotton seed)
173 Maharashtra Akola Akola Dal Mills
174 Maharashtra Aurangabad Aurangabad Auto Components
175 Maharashtra Aurangabad Aurangabad Pharmaceuticals- Bulk Drugs
176 Maharashtra Bhandara Bhandara Rice Mills
177 Maharashtra Chandrapur Chandrapur Roofing Tiles
178 Maharashtra Chandrapur Chandrapur Rice Mills
179 Maharashtra Dhule Dhule Chilly Powder
180 Maharashtra Gadchiroli Gadchiroli Castings & Forging
181 Maharashtra Gadchiroli Gadchiroli Rice Mills
182 Maharashtra Gondia Gondiya Rice Mills
183 Maharashtra Jalgaon Jalgaon Dal Mills
184 Maharashtra Jalgaon Jalgaon Agriculture Implements
185 Maharashtra Jalna Jalna Engineering Equipment
186 Maharashtra Kolhapur Kolhapur Diesel Engines
187 Maharashtra Kolhapur Kolhapur Foundry
188 Maharashtra Kolhapur Ichalkaranji Powerloom
189 Maharashtra Mumbai Mumbai Electronic Goods
190 Maharashtra Mumbai Mumbai Pharmaceutical – Basic Drugs
191 Maharashtra Mumbai Mumbai Toys (Plastic)
192 Maharashtra Mumbai Mumbai Readymade Garments
193 Maharashtra Mumbai Mumbai Hosiery
194 Maharashtra Mumbai Mumbai Machine Tools
195 Maharashtra Mumbai Mumbai Engineering Equipment
196 Maharashtra Mumbai Mumbai Chemicals
197 Maharashtra Mumbai Mumbai Packaging Material
198 Maharashtra Mumbai Mumbai Handtools
199 Maharashtra Mumbai Mumbai Plastic Products
200 Maharashtra Nagpur Nagpur Powerloom
201 Maharashtra Nagpur Nagpur Engineering & Fabrication
202 Maharashtra Nagpur Nagpur Steel Furniture
203 Maharashtra Nagpur Nagpur(Butibori) Readymade Garments
204 Maharashtra Nagpur Nagpur Handtools
205 Maharashtra Nagpur Nagpur Food Processing
206 Maharashtra Nanded Nanded Dal Mills
207 Maharashtra Nashik Malegaon Powerloom
208 Maharashtra Nashik Nashik Steel Furniture
209 Maharashtra Pune Pune Auto Components
210 Maharashtra Pune Pune Electronic Goods
211 Maharashtra Pune Pune Food Products
212 Maharashtra Pune Pune Readymade Garments
213 Maharashtra Pune Pune Pharmaceuticals- Bulk Drugs
214 Maharashtra Pune Pune Fibre Glass
215 Maharashtra Ratnagiri Ratnagiri Canned & Processed Fish
216 Maharashtra Sangli Sangli M S Rods
217 Maharashtra Sangli Madhavanagar Powerloom
218 Maharashtra Satara Satara Leather Tanning
219 Maharashtra Sholapur Sholapur Powerloom
220 Maharashtra Sindhudurg Sindhudurg Cashew Processing
221 Maharashtra Sindhudurg Sindhudurg Copper Coated Wires
222 Maharashtra Thane Bhiwandi Powerloom
223 Maharashtra Thane Kalyan Confectionery
224 Maharashtra Thane Vashind Chemicals
225 Maharashtra Thane Tarapur, Thane-Belapur Pharmaceuticals- Bulk Drugs
226 Maharashtra Thane Thane Sea Food
227 Maharashtra Wardha Wardha Solvent Oil
228 Maharashtra Yavatmal Yavatmal Dal Mills
229 Madhya Pradesh Bhopal Bhopal Engineering Equipment
230 Madhya Pradesh Dewas Dewas Electrical Goods
231 Madhya Pradesh East Nimar Burhanpur Powerloom
232 Madhya Pradesh Indore Indore Pharmaceuticals-Bulk Drugs
233 Madhya Pradesh Indore Indore Readymade Garments
234 Madhya Pradesh Indore Indore Food Processing
235 Madhya Pradesh Indore Pithampur Auto Components
236 Madhya Pradesh Jabalpur Jabalpur Readymade Garments
237 Madhya Pradesh Jabalpur Jabalpur Powerloom
238 Madhya Pradesh Ujjain Ujjain Powerloom
239 Orissa Balangir Balangir Rice Mills
240 Orissa Balasore Balasore Rice Mills
241 Orissa Balasore Balasore Powerloom
242 Orissa Cuttack Cuttack Rice Mills
243 Orissa Cuttack Cuttack Chemicals & Pharmaceuticals
244 Orissa Cuttack Cuttack(Jagatpur) Engineering & Fabrication
245 Orissa Cuttack Cuttack Spices
246 Orissa Dhenkanal Dhenkanal Powerloom
247 Orissa Ganjam Ganjam Powerloom
248 Orissa Ganjam Ganjam Rice Mills
249 Orissa Koraput Koraput Rice Mills
250 Orissa Puri Puri Rice Mills
251 Orissa Sambhalpur Sambhalpur Rice Mills
252 Punjab Amritsar Amritsar Rice Mills
253 Punjab Amritsar Amritsar Shoddy Yarn
254 Punjab Amritsar Amritsar Powerloom
255 Punjab Fatehgarh Sahib Mandi Govindgarh Steel Re-rolling
256 Punjab Gurdaspur Batala Machine Tools
257 Punjab Gurdaspur Batala,Gurdaspur Rice Mills
258 Punjab Gurdaspur Batala Castings & Forging
259 Punjab Jalandhar Jalandhar Sports Goods
260 Punjab Jalandhar Jalandhar Agricultural Implements
261 Punjab Jalandhar Jalandhar Handtools
262 Punjab Jalandhar Jalandhar Rubber Goods
263 Punjab Jalandhar Kartarpur Wooden Furniture
264 Punjab Jalandhar Jalandhar Leather Tanning
265 Punjab Jalandhar Jalandhar Leather Footwear
266 Punjab Jalandhar Jalandhar Surgical Instruments
267 Punjab Kapurthala Kapurthala Rice Mills
268 Punjab Kapurthala Phagwara Diesel Engines
269 Punjab Ludhiana Ludhiana Auto Components
270 Punjab Ludhiana Ludhiana Bicycle Parts
271 Punjab Ludhiana Ludhiana Hosiery
272 Punjab Ludhiana Ludhiana Sewing M/C Components
273 Punjab Ludhiana Ludhiana Industrial Fastners
274 Punjab Ludhiana Ludhiana Handtools
275 Punjab Ludhiana Ludhiana Machine Tools
276 Punjab Ludhiana Ludhiana Forging
277 Punjab Ludhiana Ludhiana Electroplating
278 Punjab Moga Moga Wheat Threshers
279 Punjab Patiala Patiala Agricultural Implements
280 Punjab Patiala Patiala Cutting Tools
281 Punjab Sangrur Sangrur Rice Mills
282 Rajasthan Alwar,S. Madhopur, Bharatpur Alwar,S. Madhopur Bharatpur belt Oil Mills
283 Rajasthan Ajmer Kishangarh Marbe Slabs
284 Rajasthan Ajmer Kishangarh Powerloom
285 Rajasthan Alwar Alwar Chemicals
286 Rajasthan Bikaner Bikaner Papad Mangodi, Namkin
287 Rajasthan Bikaner Bikaner Plaster of Paris
288 Rajasthan Dausa Mahuwa Sand Stone
289 Rajasthan Gaganagar Ganganagar Food Processing
290 Rajasthan Jaipur Jaipur Gems & Jewellery
291 Rajasthan Jaipur Jaipur Ball Bearing
292 Rajasthan Jaipur Jaipur Electrical Engineering Equipment
293 Rajasthan Jaipur Jaipur Food Products
294 Rajasthan Jaipur Jaipur Garments
295 Rajasthan Jaipur Jaipur Lime
296 Rajasthan Jaipur Jaipur Mechanical Engineering Equipment
297 Rajasthan Jhalawar Jhalawar Marble Slabs
298 Rajasthan Nagaur Nagaur Handtools
299 Rajasthan Sikar Shikhawati Wooden Furniture
300 Rajasthan Sirohi Sirohi Marble Slabs
301 Rajasthan Udaipur Udaipur Marble Slabs
302 Tamil Nadu Chennai Chennai Auto components
303 Tamil Nadu Chennai Chennai Leather Products
304 Tamil Nadu Chennai Chennai Electroplating
305 Tamil Nadu Coimbatore Coimbatore Diesel Engines
306 Tamil Nadu Coimbatore Coimbatore Agricultural Implements
307 Tamil Nadu Coimbatore Tirupur Hosiery
308 Tamil Nadu Coimbatore Coimbatore Machine Tools
309 Tamil Nadu Coimbatore Coimbatore Castings & Forging
310 Tamil Nadu Coimbatore Coimbatore,Palladam,Kannam Palayam Powerloom
311 Tamil Nadu Coimbatore Coimbatore Wet Grinding Machines
312 Tamil Nadu Erode Surampatti Powerloom
313 Tamil Nadu Karur Karur Powerloom
314 Tamil Nadu Madurai Madurai Readymade Garments
315 Tamil Nadu Madurai Madurai Rice Mills
316 Tamil Nadu Madurai Madurai Dal Mills
317 Tamil Nadu Namakkal Thiruchengode Rigs
318 Tamil Nadu Salem Salem Readymade Garments
319 Tamil Nadu Salem Salem Starch & Sago
320 Tamil Nadu Thanjavur Thanjavur Rice Mills
321 Tamil Nadu Tiruchirappalli Tiruchirappalli Engineering Equipment
322 Tamil Nadu Tiruchirappalli Tiruchirapalli (Rural) Artificial Diamonds
323 Tamil Nadu Tuticorin Kovilpathi Safety Matches
324 Tamil Nadu Vellore Ambur,Vaniyambadi, Pallar Valley Leather Tanning
325 Tamil Nadu Virdhunagar Rajapalayam Cotton Mills(Gauge Cloth)
326 Tamil Nadu Virudhunagar Virudhunagar Tin Container
327 Tamil Nadu Virudhunagar Sivakasi Printing
328 Tamil Nadu Virudhunagar Sivakasi Safety Matches & Fire Works
329 Tamil Nadu Virudhunagar Srivilliputhur Toilet Soap
330 Uttar Pradesh Agra Agra Foundry
331 Uttar Pradesh Agra Agra Leather Footwear
332 Uttar Pradesh Agra Agra Mechanical Engineering Equipment
333 Uttar Pradesh Aligarh Aligarh Brass & Gunmetal Statues
334 Uttar Pradesh Aligarh Aligarh Locks
335 Uttar Pradesh Aligarh Aligarh Building Hardware
336 Uttar Pradesh Allahabad Mau Powerloom
337 Uttar Pradesh Allahabad Mau Aima Leather Products
338 Uttar Pradesh Banda Banda Powerloom
339 Uttar Pradesh Bulandshahr Khurja Ceramics
340 Uttar Pradesh Firozabad Firozabad Glass Products
341 Uttar Pradesh Gautam Buddha Nagar Noida Electronic Goods
342 Uttar Pradesh Gautam Buddha Nagar Noida Toys
343 Uttar Pradesh Gautam Buddha Nagar Noida Chemicals
344 Uttar Pradesh Gautam Buddha Nagar Noida Electrical Engineering Equipment
345 Uttar Pradesh Gautam Buddha Nagar Noida Garments
346 Uttar Pradesh Gautam Buddha Nagar Noida Mechanical Engineering Equipment
347 Uttar Pradesh Gautam Buddha Nagar Noida Packaging Material
348 Uttar Pradesh Gautam Buddha Nagar Noida Plastic Products
349 Uttar Pradesh Ghaziabad Ghaziabad Chemicals
350 Uttar Pradesh Ghaziabad Ghaziabad Mechanical Engineering Equipment
351 Uttar Pradesh Ghaziabad Ghaziabad Packaging Material
352 Uttar Pradesh Gorakhpur Gorakhpur Powerloom
353 Uttar Pradesh Hathras Hathras Sheetwork (Globe, Lamp)
354 Uttar Pradesh Jhansi Jhansi Powerloom
355 Uttar Pradesh Kannauj Kannauj Perfumery & Essential Oils
356 Uttar Pradesh Kanpur Kanpur Saddlery
357 Uttar Pradesh Kanpur Kanpur Cotton Hosiery
358 Uttar Pradesh Kanpur Kanpur Leather Products
359 Uttar Pradesh Meerut Meerut Sports Goods
360 Uttar Pradesh Meerut Meerut Scissors
361 Uttar Pradesh Moradabad Moradabad Brassware
362 Uttar Pradesh Muzaffarnagar Muzaffarnagar Rice Mills
363 Uttar Pradesh Saharanpur Saharanpur Rice Mills
364 Uttar Pradesh Saharanpur Saharanpur Woodwork
365 Uttar Pradesh Varanasi Varanasi Sheetwork (Globe, Lamp)
366 Uttar Pradesh Varanasi Varanasi Powerloom
367 Uttar Pradesh Varanasi Varanasi Agricultural Implements
368 Uttar Pradesh Varanasi Varanasi Electric Fan
369 Uttaranchal Dehradun Dehradun Miniature Vacuum Bulb
370 Uttaranchal Haridwar Roorkee Survey Instruments
371 Uttaranchal Udham Singh Nagar Rudrapur Rice Mills
372 West Bengal Bankura Barjora Fishing Hooks(Information awaited)
373 West Bengal HMC & Bally Municipal area Howrah Foundry
374 West Bengal Howrah Bargachia,
Mansinghapur, Hantal, Sahadatpur & Jagatballavpur
Locks
375 West Bengal Howrah HMC & Bally Municipal area Sevok Rd Steel Re-rolling
376 West Bengal Howrah Domjur Artificial & Real Jewellery
377 West Bengal Cooch Bihar Cooch Bihar-I, Tufanganj,
Mathabangha, Mekhliganj
Sitalpati/ Furniture
378 West Bengal Kolkata Wellington, Khanpur Electric Fans
379 West Bengal Kolkata Sovabazar, Cossipur Hosiery
380 West Bengal Kolkata Metiaburuj Ward No. 138 to 141 Readymade Garments
381 West Bengal Kolkata Tiljala, Topsia,Phoolbagan Leather Goods
382 West Bengal Kolkata Daspara(Ultadanga), Ahiritola Dal Mills
383 West Bengal Kolkata Taltala, Lenin, Sarani Mechanical Engineering Equipment
384 West Bengal Kolkata Bowbazar, Kalighat Wood Products
385 West Bengal Nadia Matiary,Dharmada,Nabadwip Bell/Metal Utensils
386 West Bengal Nadia Ranaghat Powerloom
387 West Bengal Purulia Jhalda Proper, Purulia, Begunkodar & Tanasi Handtools
388 West Bengal South 24 Parganas Kalyanpur,
Purandarpur, Dhopagachi
Surgical Instruments

 


Appendix

List of Circulars consolidated by the Master Circular

 

No. Circular No. Date Subject Paragraph No.
1 RPCD.SME & NFS.BC.No. 35 /06.02.31 (P)/2010-11 06/12/2010 Ownership of units Two or more undertakings under the same ownership Status of the unit 1 (iv)
2 RPCD.SME&NFS.No.90/06.02.31/2009-10 29/06/2010 Recommendations of the Prime Minister™s  High Level Task Force on MSMEs III – 3.1, 3.2, 4.15
3 RPCD.SME&NFS.BC.No.79/06.02.31/2009-10 06/05/2010 Working Group to Review the Credit Guarantee Scheme for Micro and Small  Enterprises (MSEs) – Collateral free loans to MSEs IV 4.2, 4.19
4 RPCD.SME&NFS.No.9470/06.02.31 (P)/2009-10 11/03/2010 Sanction of Composite Loans to the Micro and Small Enterprises (MSE) sector IV 4.3
5 RPCD.SME & NFS.No. 5984/06.04.01/2009-10 01/12/2009 Credit delivery to the Micro and Small Enterprises Sector IV-4.9 (iii)
6 RPCD.SME & NFS.No. 13657/ 06.02.31( P) / 2008-09 18/06/2009 Collateral free loans to the units financed under PMEGP IV 4.2
7 RPCD.SME&NFS.BC.No.102/06.04.01/2008-09 04/05/2009 Credit delivery to the Micro and Small Enterprises Sector IV – 4.9 (ii)
8 RPCD,SME&NFS.No,12372/06.02.31(P)/2007-08 23/05/2008 Credit Linked Capital Subsidy Scheme IV-4.11
9 RPCD.PLNFS.BC.No.63/06.02.31/2006-07 04/04/2007 Credit flow to Micro, Small and Medium Enterprises Sector Enactment of the Micro, Small and Medium Enterprises Development  (MSMED), Act 2006 I
10 RPCD.PLNFS.BC.No.35/06.02.31/2005-06  

25/08/2005

Policy Package for Stepping up Credit to Small and Medium Enterprises –Announcements made by the Union Finance Minister  (for private sector, foreign banks & RRBs) IV- 4.13.1
11 RPCD.PLNFS.BC.No.31/06.02.31/2005-06  

19/08/2005

Policy Package for Stepping up Credit to Small and Medium Enterprises –Announcements made by the Union Finance Minister (for public sector banks) IV- 4.13.1
12 RPCD.PLNFS.BC.No.101/06.02.31/2004-05 20/05/2005 Scheme for Small Enterprises Financial Centres (SEFCs) II – 2.2
13 RPCD.PLNFS.BC.61/06.02.31
(WG)/ 2004-05
08/12/2004 Working Group on Flow of Credit to SSI Sector-Interest rates on with SIDBI-in lieu of shortfall in priority sector obligations III 3.3
14 RPCD. PLNFS. BC. 43/06.02.31/ 2004-05 26/10/2004 Investment by banks in securitized assets pertaining to SSI sector II 2.1
15 RPCD.PLNFS.BC.28/06.02.31
(WG)/ 2004-05
04/09/2004 Working Group on Flow of Credit to SSI sector IV 4.12.3
16 RPCD. PLNFS. BC. 39/06.02.80/ 2003-04 03/11/2003 Credit facilities for SSIs Collateral Free Loans IV 4.2
17 RPCD. PLNFS.1 /06.02.28(i))/ 2003-04 01/07/2003 SAC meeting Implementation of Action Points- Identification of Clusters IV 4.10 (i)
18 RPCD. PLNFS. BC. 24/06.02.77/ 2002-03 04/10/2002 Flow of credit to SSIs Time schedule for disposal of loan applications IV 4.1
19 DBOD.No,BL.BC.74/22.01.001/
2002
11/03/2002 Conversion of General Banking Branches to Specialised SSI Branches IV 4.4
20 RPCD. PLNFS. BC.57/ 06.04.01/ 2001-02 16/01/2002 Guidelines for rehabilitation of Sick Small Scale Industrial Units IV 4.6
21 IECD.No.5/08.12.01/2000-01 16/10/2000 Flow of Credit to SSI Sector- Decision of the Group of Ministers IV – 4.5  last para
22 RPCD.No.PLNFS.BC.89/06.02.31-98/99 01/03/1999 Flow of Credit to SSI sector-Computation of Working Capital limits IV 4.12.2 (ii)
23 RPCD.No.PLNFS.BC.22/06.02.31
(ii) -98/99
28/08/1998 High Level Committee on SSI- Kapur Committee- Implementation of recommendations IV 4.12.1
24 RPCD.No.Plan.BC.38/04.09.09/94-95 22/09/1994 Lending to Priority Sector by foreign banks III 3.3
25 RPCD.No.PLNFS.BC.84/06.06.12/93-94 07/01/1994 Bank Credit to KVI Sector – Priority Sector Advances I 1.1
26 RPCD.No.PLNFS.BC.99/06.0231/92-93 17/04/1993 Report of the Committee to examine the adequacy of institutional credit to SSI sector and related aspects- Nayak Committee IV 4.12.2

 

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