MSME Classification & Bank Loan Guidelines
Classification of Micro, Small and Medium Enterprises (MSMEs) and guidelines for extending bank credit to manufacturing and service sector enterprises.
(A) Manufacturing / Production Enterprises
Enterprises engaged in the manufacture or production of any industry specified under the Industries (Development and Regulation) Act, 1951.
Classification (Based on Investment in Plant & Machinery)
- Micro Enterprise: Investment ≤ ₹1.00 Lakh
- Small Enterprise: Investment > ₹1.00 Lakh and ≤ ₹5.00 Crore
- Medium Enterprise: Investment > ₹5.00 Crore and ≤ ₹10.00 Crore
(Original cost excluding land & building and annexure items)
(B) Service Sector Enterprises
Bank loans to MSMEs engaged in providing or rendering services as per MSMED Act, 2006.
Classification (Based on Investment in Equipment)
- Micro Enterprise: Investment ≤ ₹10.00 Lakhs
- Small Enterprise: Investment > ₹10.00 Lakhs and ≤ ₹2.00 Crore
- Medium Enterprise: Investment > ₹2.00 Crore and ≤ ₹5.00 Crore
Bank Credit Guidelines
Banks are instructed to ensure timely and smooth flow of credit to MSMEs to minimize sickness and enhance competitiveness.
- Credit facilities should be considered with utmost sympathy.
- No MSME loan application should be rejected without prior permission of the Head Office.
Annexure: Items Excluded from Investment in Plant & Machinery
- Tools, jigs, dies, moulds, and spare parts for maintenance.
- Installation charges of plant and machinery.
- R&D and pollution control equipment.
- Power generation sets and extra transformers.
- Bank/NSIC/SSIC service charges.
- Electrical wiring, panels, breakers used for power/safety.
- Gas producer plants.
- Transportation charges (excluding taxes and duties).
- Technical know-how charges for erection.
- Storage tanks not linked with manufacturing process.
- Fire-fighting equipment.
Valuation of Plant & Machinery
Investment shall be calculated on the original cost, whether machinery is new or second-hand.