MICRO

SMALL
&
MEDIUM
ENTERPRISES

11th September
2022

INDIAN INSTITUTE OF BANKING & FINANCE

Session Objectives
 Overview of MSME sector in India
 Evolution of MSMEs
 MSMED Act, 2006
 Relevance, importance and contribution of MSMEs
 Policy Framework / Definition
 Demand, supply and trends in MSME credits
 Challenges faced by MSMEs.
 Analysis of reasons for sluggish credit growth to MSME sector
 Plausible way forward.
 Measures to accelerate flow of credit to MSME sector
 Important Schemes
 Institutional Framework for MSMEs.
 Eco- system for MSMEs
Evolution of MSMEs
 Originated with the Industrial Revolution in
Europe i.e. between the 18th and 19th century.

 Division of industries into small, medium and

large industries came with the concept of
‘economies of scale’.

 Initial years growth was gradual

 due to challenges of finance and capital.

 Assistance from government in the 20th

Century speeded up the creation of newer
ent enterprises and their evolution.
Evolution of MSMEs…..
 Pre-independent India, no organizational
or government support.

 With independence, ‘The Industries

Development and Regulation Act, 1951’
provided the basic framework for
industrialization strategy.

 Initially focus was on development of capital-intensive

heavy industries and later changed priority towards MSMEs.
 Small Scale Industries (as MSMEs were then called) was
included in the constitution of India as a ‘State Subject’.
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Evolution of MSMEs….
Gradually policy focus shifted towards MSME to address
the following:

 Regional imbalances (1977);

 Facilitating linkages between large

firms and their sub-contractors (1980)

 Boosting exports especially from

rural areas (1990); Vehicle for Import
substitution.

 Industrial Policy 1991, announced deregulated industrial

economy.

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Definition of MSMEs
COUNTRIES DEFINITIONS
OECD defines
(Organisation for Statistical purposes, firms employing up
Economic Co- to 249 persons, with Micro (1 to 9), Small
operation & (10 to 49) and Medium (50-249)
Development)

UNIDO defines Functional approach, enterprises that are

(United Nations too small to achieve an optimal division of
Industrial
Development
labour, and thus an internal specialization
Organisation) in their business operations

UK defines Business with less than 250 employees

USA/European
Business with less than 500 employees
union defines
Definition of MSMEs….

MSMED
Act, 2006
Jan 1960 Inclusion
Capital of medium
investment enterprises
Mar 1959 up to 5 lakh and the
SSI unit & services
< 100 up to 10
workers in sector
lakh
per shift of a ancillary
Jun 1955 power unit
Power unit SSI unit
<50
workers
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 MSME CLASSIFICATION
OLD Definition on the basis of investment in P&M or Equipment
Classification Micro Small Medium
Manufacturing Investment < Investment < Investment <
Enterprises Rs. 25 Lacs Rs. 5 Cr. Rs. 10 Cr.
Service Investment < Investment < Investment <
Enterprises Rs. 10 Lacs Rs. 2 Cr. Rs. 5 Cr.
REVISED Definition on the basis of composite criteria on
Investment and Annual Turnover:
Classification Micro Small Medium
Investment < Investment < Investment <
Manufacturing & Rs. 1 Cr. and Rs. 10 Cr. and Rs. 50 Cr.and
Services Turnover < Turnover < Turnover <
Rs. 5 Cr. Rs. 50 Cr. Rs. 250 Cr.
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What is the need for change in Definition :-
 No change in investment limits since 2006
 Substantial increase in investment in select sectors to comply
with the new mandatory industrial standards
 The investment based definition created an uneven field for
older enterprises vis a vis new enterprises and created barrier
for new entrants
 Enterprises were killing their urge to grow due to low threshold
limit
Change in Definition – Clarification :-
 Exports of goods or services or both, shall be excluded while calculating
the turnover of any enterprise.
 Information as regards turnover and exports turnover for an enterprise
shall be linked to the Income Tax Act or the Central Goods and Services
Act (CGST Act) and the GSTIN.
 The turnover related figures of such enterprise which do not have PAN will
be considered on self-declaration basis for a period up to 31st March, 2021
and thereafter, PAN and GSTIN shall be mandatory.
 All units with Goods and Services Tax Identification Number (GSTIN) listed
against the same Permanent Account Number (PAN) shall be collectively
treated as one enterprise and the turnover and investment figures for all of
such entities shall be seen together and only the aggregate values will be
considered for deciding the category as micro, small or medium enterprise
Enterprises were killing their urge to grow due to low threshold limit
Udyam Registration process.—
 (1) The form for registration shall be as provided in the Udyam Registration portal.
 (2) There will be no fee for filing Udyam Registration.
 (3) Aadhaar number shall be required for Udyam Registration.
 (4) The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the
managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided
Family (HUF).
 (5) In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a
Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its
Aadhaar number.
 (6) In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for
previous years when it did not have PAN shall be filled up on self-declaration basis.
 (7) No enterprise shall file more than one Udyam Registration: Provided that any number of activities
including manufacturing or service or both may be specified or added in one Udyam Registration.
 (8) Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures
appearing in the Udyam Registration or updation process shall be liable to such penalty as specified
under section 27 of the Act.
Updation of information and transition period
in classification.--
 (1) An enterprise having Udyam Registration Number shall update its information online in
the Udyam Registration portal, including the details of the ITR and the GST Return for the
previous financial year and such other additional information as may be required, on self
declaration basis.
 (2) Failure to update the relevant information within the period specified in the online
Udyam Registration portal will render the enterprise liable for suspension of its status.
 (3) Based on the information furnished or gathered from Government’s sources including
ITR or GST return, the classification of the enterprise will be updated.
 (4) In case of graduation (from a lower to a higher category) or reverse-graduation (sliding
down to lower category) of an enterprise, a communication will be sent to the enterprise
about the change in the status.
Updation of information and transition period in
classification.--
 (5) In case of an upward change in terms of investment in plant and machinery or equipment
or turnover or both, and consequent re-classification, an enterprise will maintain its prevailing
status till expiry of one year from the close of the year of registration.
 (6) In case of reverse-graduation of an enterprise, whether as a result of re-classification or
due to actual changes in investment in plant and machinery or equipment or turnover or both,
and whether the enterprise is registered under the Act or not, the enterprise will continue in its
present category till the closure of the financial year and it will be given the benefit of the
changed status only with effect from 1st April of the financial year following the year in which
such change took place.
 On registration, an enterprise (referred as Udyam in the Udyam Registration portal) will be
assigned a permanent identity number to be known as―Udyam Registration Number.
 An e-certificate, namely, ―Udyam Registration Certificate shall be issued on completion of
the registration process
Benefits of MSME Registration ( Illustrative)
 Collateral-Free Loan Facilities & Priority Lending
 Credit Linked Capital Subsidies for MSMEs
 Low Interest Rate on Loan
 ISO Certification Charges Reimbursement
 Incubation Scheme for MSME
 Market Development Assistance Scheme for MSME
 Subsidy for Patent Registration
 Protection against Delayed Payments
 100% Tax Exemption for Innovative Startups
 Concessions on Electricity Bills
 Tender Preference to MSME
 Prime Minister Employment Generation Programme for MSMEs
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Policy Framework
Countries Policy Purpose

Business friendly environment

Small Business Act
for existing and potential SMEs
2008
European and monitoring progress
Union
Green Action Plan Advantage offered while
(GAP) 2014 transiting to a green economy
United SME Action Plan To improve and increase
Kingdom (UK) 2018 opportunities for SMEs
USA / Canada Accommodative Providing timely concessional
policies advance and tax concessions
East Asia To generate employment,
From export based
promote exports, and facilitate
labour intensive to
the development of appropriate
technology intensive
technologies and new
industries
entrepreneurial skills
Policy Framework in India

1948- 1991- 1999- MSMED

1991 1999 2006 Act 2006
* SIDO (apex * Testing centres * Separate Ministry
body), NSIC, set up for of MSME formed for * Promoted Khadi
KVIC, Coir certification focused attention for by introducing
Board, SISI, * SIDBI formed for their development schemes
DICs set up providing financial * Credit Linked * Bank credit
assistance Subsidy Scheme for under PMEGP,
* Various technology
* Delayed Payment Credit Guarantee
purposes – train Act, 1993 for upgradation and
youth in skills / Credit Guarantee Fund
prompt payment of
entrepreneurship dues Scheme introduced * Cluster based
* Provide * Industrial * Central Excise approach
Infrastructure Duty exemption limit
technical raised to Rs. 1 crore
* Adequate skill
training; Programme for development
reservation of setting up mini * MSMED Act, 2006
industrial estates finally enacted
items

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 Relevance and Importance of MSMEs
 Small and Medium enterprises (SMEs) account for about 90 percent
of businesses and more than 50 percent of employment worldwide
(Source-IFC)

 Crucial for the greening of economic development.

 Essential for inclusive globalization and growth (both
demographically and geographically)
 Contributes to import substitution
 Fosters entrepreneurship
 Generates employment, value addition and innovation
 Allows upward mobility of disadvantaged / disabled
people, women, migrants
 Concept of MSME is relevant in both developing and
developed economies.
 MSMEs make up the vast majority of firms and dominate many
sectors of economic activity.
Contribution of MSMEs in Economy
Figures in Rs. (crores)
Year Growth (%)In MSME GVA Total GDP Share of MSME in
(Gross Value added) GDP(%)
2013-14 12.23 112,33,522 30.20
2014-15 9.29 124,67,959 29.70
2015-16 8.65 137,64,037 29.20
2016-17 9.44 152,53,714 28.90
GVA + taxes on products - subsidies on products = GDP

Estimated Number of Enterprises (in lakh) (Survey 2015-16) in lakhs

Category Total Share (%)
Manufacturing 196.65 32
Trade 230.35 35
Other Services 206.88 33
ALL 633.88 100
Contribution of MSMEs in Economy
Category wise Distribution of Enterprises (Numbers in lakh)
Sector Micro Small Medium Total Share (%)
Rural 324.09 0.78 0.01 324.88 51
Urban 306.43 2.53 0.04 309.00 49
TOTAL 630.52 3.31 0.05 633.88 100

Estimated employment in MSME sector

Broad Activity Employment (in lakh)
Share (%)
Category Rural Urban Total
Manufacturing 186.56 173.86 360.41 32
Trade 160.64 226.54 387.18 35
Other Services 150.53 211.69 362.22 33
TOTAL 497.78 612.10 1109.89 100

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 State-wise Distribution of enterprises
Estimated Number of MSMEs
Sl. No. State/UT Number (in lakh) Share (in %)
1 Uttar Pradesh 89.99 14
2 West Bengal 88.67 14
3 Tamil Nadu 49.48 8
4 Maharashtra 47.78 8
5 Karnataka 38.34 6
6 Bihar 34.46 5
7 Andhra Pradesh 33.87 5
8 Gujarat 33.16 5
9 Rajasthan 26.87 4
10 Madhya Pradesh 26.74 4
11 Total of above ten States 469.36 74
12 Other State/UTs 164.52 26
13 All 633.88 100

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Relevance and Importance of MSMEs
 An important channel for producing diverse range of products
and services (over 6000) to meet demands of domestic/global
markets ( Annual Report – Mo MSME)
 Contributes around 30% of India’s GDP.
 Contributes around 45% of manufacturing output of the
country.
 Contributes around 40% to total exports of the country.
 Provides employment to around 111 million people across
urban & rural India.
 Total 63.38 million units are in MSME sector.
 MSMEs are complementary to large industries as ancillary units.
MSME Advances

Demand, Supply
and
trends in growth
and NPA in
MSME Credits
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 (Rs. in INR Trillion)

109.51
120 102.18
97.1
87.46
100 78.96 81.16
73.88
67.35
80

60

40

17.4 18.39 19.21

12 13.04 14.08 14.68
20 10.49
Total Net Advance
Total MSME
0
2014 2015 2016 2017 2018 2019 2020 2021

Total MSME Total Net Advance

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 “

Total credit requirements for MSME sector is INR36.70 trillion leaving a

gap of Rs18.69 Trln
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 Reason for sluggish growth
 Even though SMEs are considered the backbone of the
economy, they encounter many bottlenecks that have held
them back from realising their true potential. Being
technologically less advanced and having restrictive budgets,
the small enterprises face challenges such as limited access
to finance, markets and technology, and poor infrastructure,
regulatory and tax related challenges.

 An astonishing 95% of all firms in India employ less than 5

people and 98% employ less than 10 people.

 Only 20,000 firms have paid-up-capital exceeding INR 10

crore.
 Reason for sluggish growth
 India lags behind comparable countries across key enablers,
for instance steel prices are 15% higher and power costs for
industrial and commercial power in India are up to 30% higher
than in China. Logistics cost are 12‒14% of the GDP in India
compared to 8‒10% for other BRIC countries Nearly 95% of
India’s enterprise base comprises sub-scale and informal
micro-enterprises, with limited job creation capabilities and
ability to offer only low wages.
 Fewer than 10 lakh of India’s 6.3 crore enterprises pay social
security such as employees’ state insurance (ESI).
 Labour productivity in India is 1/3rd of Malaysia's and 2/3rd of
China’s, and India’s MSME credit gap is at substantial level
(according to the IFC).

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 Reason for sluggish growth
 While India has risen to the 63rd rank globally (of 195
countries) on ease of doing business, the ‘on ground’
experience of MSMEs still needs to improve significantly. High
compliance burdens and costs, and complex processes remain
a bottleneck for growth, productivity, innovation, and
formalization of the MSME sector. For instance, registering a
business takes up to 90 days in India but 1 day in leading
countries such as New Zealand
 These lack of dynamism among MSMEs in India is attributed to
the absence of the right “Seed” (i.e., entrepreneurs), “Soil”
(i.e., sector-specific local inputs) and “Climate” (i.e., culture
and enablers).

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 Reasons for sluggish growth

 Three shocks viz. Demonetization, GST and now the

Pandemic have subdued the growth of MSME sector.
 Before demonetization working capital used to take place
through cash transaction in many units which are now not
taking place.
 Most of the MSME borrowers do not have expertise towards
filing of GST Returns. Need to engage Professionals which add
to cost.
 Pandemic – Recent surveys indicate more than 30% of the
units may face possibility of extinctions.

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Reasons for sluggish growth… (Contd.)
 Lender Coverage Outreach.
 A typical MSME factory must file for 23+ registrations and
licenses, 750+ compliances, and 120+ filings per annum;
 Corporatization of household market – Atta, Flour, Rawa, spices,
sattu . The space for MSMEs engaged in these activities has been
squeezed with dominance of Corporates in the segment.
 Huge import of merchandise, leave aside handset, server, 5-G
equipment, mobile – even most ordinary items – Diwali bulbs, fire
crackers, toys, Ganesh Idols, home-decors are coming from China
a flooded market.
 Lack of demand in economy, recent GDP trend is an indicator.
 There is no bank in the country which is pursuing MSME Financing
as core business activity.
Reasons for sluggish growth… (Contd.)

 We need to simplify compliances and processes across starting

and running a business to ensure effective utilization of
entrepreneurs' time and resources. Simplifying seven key
processes with highest impact and likelihood of implementation
(registering a new business, registering property, construction
permits, filing labour compliances, filing environment health
and safety (EHS) compliances, availing credit, and tax
compliances and payments).
 Potentials plans would rest on Skill Development,
Infrastructure, Technology, Marketing and credit availability.
Concerted efforts from lenders, regulators and government to
create enabling regulations , ideal echo system for growth.
PATHS TO RECOVERY
 Way forward … Seed
 To support the push for prosperity and self-reliance (“Atmanirbhar Bharat”), India has to
create a massive entrepreneurial movement.
 This will require vibrant local entrepreneurial ecosystems like Bengaluru and Gurgaon in
300+ cities by 2030 by carefully combining factors such as “Seed” , “Soil” and “Climate”

 “Seed” : (Education levels, the degree to which young people have ambition and an
entrepreneurial mindset),
 High aspirations for formal employment and not entrepreneurship. In India,
entrepreneurship is associated with tech unicorns and billionaires rather than millions of
job-creating MSMEs—this focus on tech-oriented businesses discourages 'mass
entrepreneurship
 The youth in India primarily aspire for government (e.g., 60% of youth in states like
Karnataka and Punjab) and private-sector jobs—as a result, entrepreneurship in India is
much lower than countries like Thailand and Vietnam (with 7X to 10X higher business
registrations rates).
 Create a pipeline of entrepreneurs by investing in education and incubation by making an
entrepreneurship curriculum compulsory in schools, ITIs and colleges, and by promoting
tinkering labs, entrepreneurship cells and incubators in every school and college.
 Way forward … Soil
 “Soil” (infrastructure, connectivity, access to markets, access to
credit/capital) :
 Introduce sector-specific initiatives to create a thriving entrepreneurial ecosystem
(Potential sectors to be identified for each state) by:
 Attracting private anchor investors (Indian and international) to build an
ecosystem around these hubs, driving demand to MSMEs, and upskilling labour and
technology needs.
 Setting up land banks/ SEZs with associated physical (plug and play
infrastructure, logistics, shared services) and digital infrastructure (connectivity,
marketplace).
 Increasing credit availability through focused angel and VC funds as a PPP
initiative, and instituting supply chain finance and digital lending platforms with
associated awareness
 Creating a branding/marketing campaign around local products, quality and
infrastructure, and establishing marketing as a shared service for the hub to
enable outreach
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 Way forward … Climate
 “Climate” (local culture and key enabler)
 Shaping an entrepreneurial culture requires demonstrating and publicizing
tangible growth (e.g., export contracts, new hires, etc.) among cohorts of local
enterprises .
 It also requires mentored support and a showcase of success (and a tolerance
for failure) through targeted ‘growth events/celebrations’ which demonstrate
the journey of small businesses.
 The state could enable this while also leveraging ‘growth events’ to bring the
local ecosystem of corporate leaders, the government, bankers and VCs to help
support MSME cohorts.
 Apart from fostering a culture of entrepreneurship, it is essential to ensure easy
access to critical enablers, e.g., cost-effective access to land (alternative
models such as amortization), power (tariff rationalization, open access) and
infrastructure, taxation and incentives, and labor availability (digital platforms,
training programs) to help MSMEs truly thrive.
 Way forward …
 Reinforcing CLUSTER approach – One strong way forward for Indian MSMEs
 Sectoral and geographical segmentation of enterprises that face common
threats and opportunities into clusters has proven to be hugely successful
for SMEs globally, especially in China.
 As these clusters are founded on their homogenous characteristics, they
render collective advantages by making available workers with sector-
specific skills and suppliers of raw materials, components and machinery.
 SME clusters are known to infuse responsible business practices and
help tap market opportunities that could not be achieved in
isolation. Clusters also ensure that an otherwise disorganised SME
sector would come up in a planned manner. Clustering can augment
the growth of SMEs and it could be their answer to rising global
competition.
 Way forward …
 Design uniform / simplified loan applications (IBA / SIDBI)
 Collateral free loan limit to enhance from 10 to 20 lakhs – as per
recommendation of Mr. U K Sinha committee.
 TESLA: Transition to Sustainable Energy through electric Car
companies. It will build around a chain of ancillary industries.
(Intel, Sumsung …). Country need to create a competitive Business
Echo system .
 SEBI/ MCA to mandate clearance of a percentage of invoice value
within 45 days of receipt of invoice and threshold guidelines to be
set, e.g., minimum clearance target of at least 60% of invoice value
 Greater ease of doing business, simplification of procedures,
compliance.( Differentiated policy on GST, enabling regulations on
Rehabilitation and Restructuring, preferential IBC codes) .

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 Credit Availability (Lenders, Regulators)
 SFBs have a strong role to play particularly in rural areas (objectives of
their operation, branch licensing, priority sector targets).
 NBFCs/MFIs can also play greater role (here the issue of interest rate is a
deterring element).
 Neo Banks – Digital platform = Paperless, presence less ,data driven lending
platform of unsecured loans.
 Banks can collaborate with fintech companies or independently. Regulatory
guidelines on KYC compliance other due diligence/ compliance are need to
be in place. Enabling regulations can be game changer.
 (Technology Centre, NSIC or in partnership with private enterprises can
ensure on boarding of of micro entrepreneurs at rural places for on
boarding to Digital platform. SIDBI can play the role as a facilitator /
arrange handholding)
 SIDBI can play the role as a facilitator / arrange handholding.
RBI MD(July 2017)-Lending to MSME (Regulatory Guidelines)
 Qualifies for PSL target of banks subject to
 Goods produced as specified in the First Schedule to the Industries (Development
and Regulation) Act, 1951
 Bank loans up to a limit of ₹30 crore to Renewable Energy .Borrowers for purposes
like solar based power generators, biomass based power generators, wind mills,
micro-hydel plants and for non-conventional energy based public utilities viz. street
lighting systems, and remote village electrification. For individuals it is Rs10 lakhs.
 Loans up to ₹50 crore to Start-ups, as per definition of Ministry of Commerce and
Industry, Govt. of India that confirm to the definition of MSME as per
 Bank loans up to a limit of ₹5 crore per borrower for setting up schools, drinking water
facilities and sanitation facilities including construction/ refurbishment of household
toilets and water improvements at household level, etc. and loans up to a limit of ₹10
crore per borrower for building health care facilities including under ‘Ayushman
Bharat’ in Tier II to Tier VI centres
RBI MD(July 2017)-Lending to MSME (Regulatory Guidelines)
 7.5% of ANBC - For lending to Micro Enterprises
 All KVI loans to be included here
 OD up to Rs 10,000 (PMJDY) (family income up to Rs 1 lac in Rural and up to Rs 1.60 lacs in
others) [ANBC is Net Bank Credit(Bank credit-Bills Rediscounted) plus investment by
banks in non-SLR bonds held in HTM category]
 Loans to food and agro processing units ( up to aggregate limit ofRs100cr per borrower) to form
part of agriculture.
 PM’s Task Force on MSME
 20% y-o-y growth in credit to Micro & Small Enterprises
 10% annual growth in NUMBER of Micro Enterprises Accounts
 60 % of total lending to MSE sector as on corresponding quarter of previous year—to
Micro Enterprises
 (Advances granted to units in the KVI Sector (Khadi and Village Industries), irrespective
of their size, location and amount of investment will be eligible under sub-target of finance
to micro enterprises (i.e. 60% of total lending to MSE Sector))
RBI MD-Lending to MSME (July 2017)
 To enjoy PSL status up to 3 years even after the enterprises grow out of
the MSME category concerned
 Collateral-free loans up to Rs. 10 lakhs to MSE units and those financed
under the PMEGP programme administered by KVIC.
 Composite Loan Limit of Rs. 1 crore can be sanctioned
 Credit Linked Capital Subsidy Scheme (CLCSS)
 Financial Literacy Centres operated by SCBs to conduct target specific
( micro entrepreneurs/ artisans) financial literacy camps.
 Framework for Revival and Rehabilitation of Micro, Small and Medium
Enterprises (MSMEs)-a simpler and faster mechanism to address the
stress in MSME accounts –(RBI Cir. March 17, 2016)
RBI MD-Lending to MSME (July 2017)
Banking Codes and Standards Board of India
 Explain the role of CICs (Credit Information Companies)
 CIC to be kept updated when an account becomes Standard from Sub-
standard
 Loan Policy of the Bank will be reflective of the objectives and spirit of
the National Policy and Regulatory Prescriptions.
 Policy on Lending to Micro and Small Enterprises and Rehabilitation to
be placed on web site of the Bank.
 Salient features of CGTMSE to be informed to the borrower.
 No processing fee for loans up to Rs 5 lacs
 Rejection reason to be conveyed in writing
 Allow pre-payment of Floating rate loans without pre-payment /
foreclosure charges
 Allow pre-payment of fixed rate loans up to Rs 50 lakh without pre-
payment foreclosure charges
 Release all securities immediately on repayment of loan and in any case
within 15 days of the repayment of all dues agreed to or contracted.
ECLGS-Credit Guarantee Emergency Credit Line
 Purpose of the Scheme: To provide 100% Guarantee coverage for the
ECLGS - a pre-approved sanction limit of up to 20% of loan outstanding as on
29th February, 2020 to Eligible Borrowers, in the form of additional Working
Capital Term Loan facility (in case of Banks and FIs), and additional Term loan
facility (in case of NBFCs) from all Member Lending Institutions (MLIs) to eligible
Business Enterprises / Micro, Small and Medium Enterprise (MSME) borrowers,
including interested PMMY borrowers, in view of COVID-19 crisis, as a special
Scheme.
 The financial assistance provided as part of the Scheme is to be operated as a
separate loan account.
 Amount in Default – Principal and interest outstanding in the account of
the borrower in respect of Term loan/working Capital term Loan facility
(including interest) as the case may be, as on the date of the account becoming
NPA, or on the date of lodgment of claim application, whichever is lower,
subject to a maximum of amount guaranteed.
 Member Lending Institutions- All SCB / FIs/ NBFCs
 Duration: Till 30th Nov 2020/ 31st Mar/30th Sept 21/ 31st March 22 or Till
Rs4,50,000 Crs are sanctioned. Till Now Rs2.97 Lakh Crs sanctioned/
Disbursement Rs2.85 Lakh Crs only. Disbursement till 31st Dec21/ 30th June 22.
ECLGS 1.0, ECLGS 2.0. ECLGS 3.0. ECLGS 4.0
ECLGS 1.0
 Existing Guidelines: All MSME/ Business Enterprises/ Individuals with
Total Credit outstanding (FB only) against all MLI up-to Rs 50 Crs. and
days past due(DPD not more than 60 days as on 29 February 2020 ie
SMA-1 are eligible for additional Working Capital Term Loan of 20% of
their Total Credit outstanding as on 29 February 2020 subject to the
borrower meeting all the eligibility criteria.
 Revised Guidelines: All borrowers who have availed assistance under
ECLGS 1.0 or new eligible borrowers as per revised reference date of 31
March 2021 and meet other terms of these guidelines are eligible for
additional Working Capital Term Loan facility of 30% of their Total Credit
Outstanding as on 29 February 2020 or 31 March 2021, Whichever is
higher (Net of Credit support received under ECLGS 1.0, if any) subject
to the borrower meeting all the eligibility criteria. Scheme now
extended upto 31st March 2023!
ECLGS 1.0, ECLGS 2.0. ECLGS 3.0. ECLGS 4.0
ECLGS 2.0
 Existing Guidelines: All MSME/ Business Enterprises Borrower accounts in 26
Sectors as identified by Kamath Committee on Resolution Framework (Power,
Construction, Steel Roads, Textile, Chemical etc.) and the Health Sector with
Total Credit Outstanding (FB only) against all MLI above Rs 50 Crs. and up-to Rs
500 Crs. And Days Past Due(DPD-SMA-1) not more than 60 days as on 29 February
2020 are eligible for additional Working Capital Term Loan facility and/ or NFB
facility or a Mix of two of 20% of their of their Total Credit Outstanding (FB only)
as on 29 February 2020 subject to the borrower meeting all the eligibility
criteria.
 Revised Guidelines: All borrowers who have availed assistance under ECLGS 2.0
or new eligible borrowers as per revised reference date of 31 March 2021 and
meet other terms of these guidelines are eligible for Additional Working Capital
Term Loan facility and/ or NFB facility or a mix of two of 30% of their of their
total credit outstanding (FB only) as on 29 February 2020 or 31 March 2021,
whichever is higher (Net of Credit support received under ECLGS 2.0, if any)
subject to the borrower meeting all the eligibility criteria.
ECLGS 1.0, ECLGS 2.0. ECLGS 3.0. ECLGS 4.0
ECLGS 3.0
 Existing Guidelines: All MSME/ Business Enterprises Borrower accounts in
Hospitality Sector (Hotels, Restaurants, Marriage Halls, Canteen etc.), Travel
& Tourism sector, Leisure & Sporting sector and Civil Aviation (including
scheduled and Non-scheduled Airlines, Chartered flight operators, air
ambulances and airports) with days past due not more than 60 days(SMA-1)
as on 29 February 2020 are eligible for Additional Working Capital Term Loan
facility of 40% of their of their Total Credit Outstanding (FB only) as on 29
February 2020 subject to a cap of Rs 200 Crs. per borrower.
 Revised Guidelines: All borrowers who have availed assistance under ECLGS
3.0 or new eligible borrowers as per revised reference date of 31 March
2021 and meet other terms of these guidelines are eligible for Additional
Working Capital Term Loan facility of 50% of their of their Total Credit
Outstanding (FB only) as on 29 February 2020 or 31 March 2021, whichever
is higher (Net of Credit support received under ECLGS 3.0, if any) subject to
a cap of Rs 200 Crs. per borrower.
ECLGS 1.0, ECLGS 2.0. ECLGS 3.0. ECLGS 4.0
ECLGS 4.0
 Existing Guidelines: All existing Hospitals/ Nursing Homes/ Clinics/ Medical
Colleges/ Units engaged in manufacturing of Liquid Oxygen, Oxygen
Cylinders etc. having credit facility with a lending institution (not
necessarily MLI) with days past due(SMA-0/1/2) upto 90 days as on 31 March
2021 and requiring Credit assistance up-to Rs 2 Crs. for setting up
Technologies like Pressure Swing Absorption etc. for Onsite Oxygen
Producing Plants in the form of Fund Based (Term Loan) or Non Fund Based
(LC for Import of Capital Goods).
 Revised Guidelines: No change.
ECLGS Eligible Borrowers?
 All Business Enterprises /MSMEs/individuals who have availed loan for business purposes with outstanding
loans of up to Rs.50 Crore/ Rs500 Crs as on 29.2.2020, and Annual Turnover of up to Rs. 250 Crore in FY
2019-20 (Now under Atmanirbhar 3.0- No Cap on Turnover wef 13th Nov 20)
 Business Enterprises /MSME borrower must be GST registered where such registration is mandatory. This
condition will not apply to Business Enterprises / MSMEs that are not required to obtain GST registration.
 Loans provided to Business Enterprises / MSMEs constituted as Proprietorship Partnership, Registered
Company, LLPs shall be eligible under the Scheme.
 In case accounts for FY 2019-20 are yet to be audited/finalized, the MLI may rely upon the borrower’s
declaration of Turnover.
 The Scheme is valid for existing customers/Borrower accounts which are less than or equal to 60 days
Past Due as on 29th February, 2020 in order to be eligible under the Scheme.(ie SMA-2>60 days & NPA
accounts not Eligible for ECLGS)
 For the purpose of this Scheme, the Term Business Enterprises / MSMEs would also include Loans covered
under Pradhan Mantri Mudra Yojana (PMMY).
 ‘Guarantee Cover’ means the maximum cover available per eligible borrower of the amount in default in
respect of the credit facility extended by the lending institution. For this Scheme, the guarantee
coverage would be 100%of the amount in default.
 Tenure of Guarantee Cover : The maximum period of guarantee cover which shall be co-terminus with the
Tenor of the Term loan under ECLGS(4/5 Years)
Interest Rate Applicable
 For Banks and FIs, lending rate linked to one of the external benchmark rates
prescribed by RBLR for WC(+ 5 Yrs Tenor Spread) % subject to a maximum of 9.25%
per annum. For NBFCs, the interest rate on GECL shall not exceed 14% per annum.
 Since the additional pre-approved facility is to be provided to existing customers,
no additional processing fee shall be charged by MLIs to borrowers. No penal
interest due to any non-compliance of the already accepted covenants on the
existing credit facilities.
 Nature of account and Tenor of Credit under the Scheme: Separate WCTL/4-5 Years
 A separate loan account should be opened for the borrowers. The tenor of loans
provided under ECLGS shall be for a period of four/Five years from the date of
disbursement.
 No pre-payment penalty shall, however, be charged by the MLIs in case of early
repayment. Moratorium period of one year on the principal amount shall be
provided to borrowers for the CGECL funding during which interest shall be payable
 The principal shall be repaid in 36/48 installments after the moratorium period is
over.
 RBI has allowed Risk weight for loans provided under ECLGS at Zero.
Security
 The additional WCTL (in case of banks and FIs)/ Term loan (in case of
NBFCs) facility granted under ECLGS shall rank second charge with the
existing credit facilities in terms of cash flows (including repayments)
 Security, with charge on the assets financed under the Scheme to be
created within a period of three months from the date of disbursal.
 No additional collateral shall be asked for additional funding under ECLGS.
 Guarantee Fee: No Guarantee Fee shall be charged from the MLIs by
NCGTC for the Credit facilities provided under the Scheme.
 Invocation of Guarantee: MLIs/Banks/FIs are required to inform the date on
which the account was classified as NPA within 90 days of the account
being classified as NPA. The NCGTC shall pay 75 per cent of the guaranteed
amount within 30 days of preferring of eligible claim by the MLIs.
 The Balance 25 per cent of the guaranteed amount will be paid on
conclusion of recovery proceedings or till the decree gets time barred,
whichever is earlier.
ECLGS Extended/ Modified under 4.0 Dt 30th May 21 under 2nd Phase
of Covid-19/
 100% guarantee cover to loans up-to Rs2.00 Crs to Hospitals/Nursing
Home/Clinics/Medical Colleges to set up onsite Oxygen Generation Plants @ 7.5% PA only.
 Borrowers eligible for Restructuring as per RF-2.0 as per RBI Circular-32 Dt 5th May 21 &
have availed ECLGS under 1.0 for an overall tenure of 4 Years consisting of interest
payment only during 1st Year followed by 36 EMIs can be provided now a tenure of 5 Years
with 24 months interest payments only followed by 36 EMIs of Principal now.
 Additional ECLGS to the tune of 10% of O/s Balance as on 29th Feb 20 to Borrowers
covered under ECLGS-1.0 with restructuring facility as per RBI’s RF-2.0 Dt 5th May 21.
 Current ceiling of Rs500 Crs of O/s Loan for eligibility under CGECL-3.0 stands removed,
subject to maximum additional ECLGS assistance capped to 40% or Rs200 Crs whichever is
lower.
 Civil aviation Sector eligible under ECLGS-3.0
 ECLGS extended now for sanctions up-to 30th Sept 21/ 31st March 22/23 or till Total
guarantees issued reaches Rs3.00+Rs1.50 Lakh Crs= Rs4.50 Lakh Crs as against originally
envisaged. ECGCL-1.0/2.0 Borrowers to have additional 10% as of 29th Feb20 0r 31st
March 21 whichever is higher. Fresh ECLGS available now @30% of o/s Bal as on 29th Feb
20 or 31st March 21 whichever
 Disbursement upto -30thJune 22. Micro Enterprises- 85% Sanctioned, SME- 95%
 About 13.5 Lakhs Loan Accounts(1.5 Crs employed) with Rs1.50 Lakh Crs O/s NPA saved
ECLGS Further extended up-to 31st March 2023
 As per FY 2022-23 Budget Announcements by FM on 1st Feb 2022
 ECLGS Further extended up-to 31st March 2023
 An additional Amount of Rs50,000 Crs allocated as an exclusive Guarantee
Coverage Corpus for Aviation & Hospitality Sector over & above
Ra4,50,000 Crs already announced
 Disbursement upto -30thJune 22. Micro Enterprises- 85% Sanctioned, SME-
95%
 About 13.5 Lakhs Loan Accounts(1.5 Crs employed) with Rs1.50 Lakh Crs
O/s NPA saved

 CGTMSE Scheme to be revamped to provide & Facilitate addition MSME

Credit worth Rs2,00,000 Crs during 2022-23
 Under MSME RAMP Programme, MSME Units to be provided with multiple
facilities
 Subordinate Debt for Stressed MSMEs
 Objectives :To provide a substantial help by way of Equity or Debt in
sustaining and reviving the MSMEs which have either become NPA or are
on the brink of becoming NPA as required for Restructuring of the a/c.
 Promoter(s) may infuse this amount in MSME unit as equity and thereby
enhance the liquidity and maintain Debt Equity Ratio.
 In a situation, where an outright loan is difficult, Sub-Debt with guarantee
will provide the requisite financing to the MSME Units.
 Eligibility/ Applicability: This Scheme seeks to extend support to the
Promoter(s) of the operational MSMEs which are stressed and have become
SMA-2 or NPA as on 30th April, 2020.Total Targeted amount for Sanction:
Rs2000 Crs
 Nature of Assistance: Promoter(s) of the MSMEs will be given Credit equal
to 15% of their stake (Equity plus Debt) or Rs. 75 lakh whichever is lower.
 The maximum tenor for repayment will be 10 years. There will be a
moratorium of 7 years on payment of principal.
 Guarantee for the Sub-Debt: 90% guarantee coverage would come from the
scheme / trust and remaining 10% from the Promoters as Collateral.
Government eMarketplace (GeM) Platform
 Digital e-commerce Portal launched by the commerce and industry
ministry (host-Directorate General of Supplies & Disposals) on 9th
August 2016.
 Objective - to enable open, transparent and efficient public
procurement platform for government departments and agencies.
 Real-time rate comparison enables buyers to take
informed decision.
 GeM platform is now being extended to all central
public sector enterprises.

 MSMEs have an opportunity to sell their products through GeM.

 Transactions worth over Rs 17,500 crore have already taken place.
 The central and state governments procure goods and services
worth over Rs 5 lakh crore annually via the platform.
 As many as 1,90,226 sellers and service providers are offering
products on this platform.
TReDS Exchange
 Genesis – Financial Sector Reforms Committee (2008) recommended
setting up of an electronic bill factoring exchange
 Receivables Exchange of India Ltd (RXIL)- First Entity to receive
RBI approval to launch India's First TReDS Exchange . A TREDS
Ltd ( Joint Venture of Axis Bank and MJuction) and Mynd
Solutions Pvt Ltd are the other two exchanges in operation.
 RXIL was incorporated on February 25, 2016 as a joint venture
between Small Industries Development Bank of India (SIDBI) – the
apex financial institution for promotion and financing of MSMEs in
India and National Stock Exchange of India Limited (NSE) - premier
stock exchange in India.
 RXIL operates the Trade Receivables Discounting System (TReDS)
Platform as per the TReDS guideline issued by Reserve Bank of India
(RBI) on December 3, 2014.
 Process of TReDS
a) Buyer corporate sends purchase order to MSME.
b) MSME delivers the goods along with Bill to be paid by due date.
c) Buyer corporate accepts the goods and based on instruction received from
MSME, The accepted Bill is then uploaded on the Trade Receivables and Credit
Exchange (TCE).
d) Receivables of MSME from buyer corporate become available to the
financiers for bidding and financiers submit their online bids to the TCE.
e) Various bids submitted by financiers become available to the MSME.
f) MSME evaluates the options and accepts a bid. If it does not exercise its
option, the auction closes at the expiry of specified period.
g) When MSME accepts the bid of a financier, an online intimation is sent by
the TCE to all concerned parties viz, MSME, Buyer Corporate and
Financier about the discounting of bill through the TCE.
h) Payment is made by the financier to MSME through NACH on T+1 basis
i) On due date, buyer corporate directly pays to the financier.
 Process of TReDS
a) Automated transparent platform, Competitive price discovery, Not dependent on single
financier .
b) Payment received on T+1 on successful auction
c) Without recourse to seller
d) Compliant with MSMED Act 2006
e) Ensure that their vendors are not strapped for cash/working capital
 Ecosystem for MSME Sector
ECOSYSTEM (SUBSIDIARY and ASSOCIATES)
SIDBI VENTURE CAPITAL LIMITED (SVCL)
 SIDBI Venture Capital Limited (SVCL), a wholly owned subsidiary of SIDBI to provide growth
capital to deserving and profitable MSEs across diversified sectors. Currently, SVCL is a
prominent Investment Manager for seven funds with a total corpus of INR1,754 crore. The funds
managed by SVCL have been instrumental in generating a valuable growth momentum among
key sectors of the economy.
UDAAN (CGTMSE) In the absence of collateral, it facilitates access
to finance for un-served and under-served geographies, making
availability of finance from conventional lenders to new generation
entrepreneurs and under privileged.
CGTMSE introduced the Credit Guarantee Scheme (CGS) for Micro
and Small Enterprises (MSEs) which guarantees credit facilities up
to INR 200 lakh on automated digital platform, extended by (MLIs).

MICRO UNITS DEVELOPMENT & REFINANCE AGENCY LTD. (MUDRA)

 Micro Units Development & Refinance Agency Ltd. (MUDRA) was set up on April 08, 2015 as a
wholly owned subsidiary of SIDBI for “funding the unfunded” micro enterprises in the country.
MUDRA has been supporting Banks, Micro-finance Institutions (MFIs), NBFCs and other lending
institutions through refinance assistance for onward lending to micro/ small business entities
engaged in manufacturing, trading, service sector activities, activities allied to agriculture.

INDIAN INSTITUTE OF BANKING & FINANCE

ECOSYSTEM…
RECEIVABLES EXCHANGE OF INDIA LTD (RXIL)
 Receivables Exchange of India Ltd (RXIL) was set up on February 25, 2016 as a joint
venture of Small Industries Development Bank of India (SIDBI) and National Stock
Exchange of India Limited (NSE), with an objective to operate India’s First Trade
Receivables Discounting System (TReDS) - an online platform for financing of
receivables of Micro, Small & Medium Enterprises. RXIL commenced operations on
January 09, 2017.
ACUITÉ RATINGS & RESEARCH LIMITED
 Acuite Ratings & Research Limited (WWW.ACUITE.IN) is a credit rating agency[in
collaboration with Dun & Bradstreet Information Services India Private Limited (D&B
India)] accredited by Reserve Bank of India (RBI) as an External Credit Assessment
Institution (ECAI) and registered with the Securities and Exchange Board of India (SEBI).
 SMERA is a division of Acuite. SMERA (www.smeraonline.com/) focuses on eliminating
information asymmetry in the SME lending market through ratings, credit reports.
International Finance Corporation (IFC) recognized SMERA as a novel and sustainable
initiative of the Government of India, to improve the credit flow to the MSME sector. In
2007, the Association of Development Financing Institutions in Asia and the Pacific
(ADFIAP) awarded SIDBI with "Outstanding Development Project Award" under the SME
Development Category, for setting up SMERA.
 ECOSYSTEM…
INDIA SME TECHNOLOGY SERVICES LIMITED (ISTSL)
 India SME Technology Services Limited (ISTSL) was set up in November
2005 by SIDBI along with SBI, Indian Bank, Indian Overseas Bank and
OBC (now PNB) with the primary objective to strengthen and accelerate
the process of technological modernization in the MSME sector.
 Key technical development services offered by ISTSL include sharing of
information on technology options, match-making, finance syndication and
business collaborations
INDIA SME ASSET RECONSTRUCTION COMPANY LTD (ISARC)
 India SME Asset Reconstruction Company ltd (ISARC) was incorporated
on 11th April 2008 by SIDBI, in association with leading Public Sector
Banks as the country’s first Asset Reconstruction Company with the
principal objective to acquire non-performing assets (NPAs), primarily from
MSMEs, and accelerate the restructuring of potentially viable units and
liquidation of unviable units, so that productive use of the assets is
maximized. It commenced business operations on 15th April 2009.
 ECOSYSTEM…
CRISIL SIDBI MSE SENTIMENT INDEX- (CRISIDEX.)
 Effective policy making is a function of the quality of information at hand. Because data on micro and small
enterprises (MSEs) comes with a significant lag, a comprehensive and concise lead + lag indicator of ground-level
sentiment becomes a crucial tool for policy makers, lenders, trade bodies, economists, rating agencies and the
MSEs themselves. Till now, there was no such barometer available in India for MSEs.
 CRISIL and SIDBI decided to launch the CRISIL-SIDBI MSE Sentiment Index, or CriSidEx. Earlier it was one time
Ad-hoc surveys by Business chambers/ specific Agencies. CRISIDEX will be continuous and regular exercise.
MSME PULSE - These are Comprehensive Reports published quarterly based on close monitoring and tracking of
MSME segment. It provides credit industry with trends and insights for making informed business decisions and
provides insights to policy makers
MICROFINANCE PULSE:- First-of its-kind newsletter “Microfinance Pulse” tracks the trends in the microfinance
sector viz., disbursements delinquencies, state-wise distribution, top loan categories etc (Equifax).
FINTECH PULSE - Fintech Pulse, a quarterly report on Fintech lending in India with the focus on New Age Fintech
emerging as Differentiators in timely and adequate delivery of credit to unserved and underserved. The report aims to
bring out how the emerging technologies are causing disruption in the financial sector and the impact of these
technologies in credit landscape, apart from analytical contents regarding performance etc. on key parameters.
Institutional Framework ( Illustrative)
S.No. Name of Institution Responsibility
National Level
1. National Board for MSME Examines factors affecting promotion and development
(NBMSME) of MSMEs, formulate , review and monitor existing
policies and programmes and makes recommendation to
the Government
2. Office of the Development Implementing the policies and various
Commissioner (DC-MSME) programmes/schemes for providing infrastructure and
support services to MSMEs
3. Technology Centres About 18 established through collaboration with other
countries, provides tech support Indo German Tool Room
(IGTR), Ahmedabad.AurangabadIndo Danish Tool Room
(IDTR), Jamshedpur ( Skill dev’t thru trng, Quality tools,
Consultancy. TCs are ISO certified
4. National Small Industries To provide integrated support services encompassing
Corporation (NSIC)- Marketing, Technology, Finance and other services

5. Khadi and Village Industries To provide employment and create self-reliance amongst
Commission (KVIC)- the poor. Implementing PMEGP scheme.
6. Coir Board Development of coir industry
Institutional Framework
S.No. Name of Institution Responsibility
7. National Institute of MSME (NI- Training, Consultancy, Research etc.
MSME), Hyderabad
8. Mahatma Gandhi Institute for Accelerate the process of Rural
Rural Industrialization, (MGIRI) Industrialization in the country.
9. National SC/ST Hub To provide professional support to SC/ST
entrepreneurs and leverage the Stand
Up India initiative
State Level
1. Directorate of Industries Network of DIC at District Level,
Industrial Officers at Sub-Divisional Level
Extension Officers at Block Level
2. District Industry Centres (DICs) To generate employment at Local level
3. State Financial Corporation To serve as Regional Development Banks
(SFCs) for providing industrial growth
4. Financial Institutions and Supporting Grant to MSME
Industry Associations
INDIAN INSTITUTE OF BANKING & FINANCE
Government facilitations for growth of MSMEs
My MSME
 Web based application module launched by the Office of
Development Commissioner (MSME)
 To enable MSMEs to take benefits of various schemes offered
 Mobile app also available for MSMEs to track their applications

INDIAN INSTITUTE OF BANKING & FINANCE

Government facilitations for growth of MSMEs
MSME Data Bank
 To facilitate promotion, development and competitiveness
 MSMEs can update information about their products/services without
visiting any government office
 Enables Ministry to monitor schemes and pass on benefits directly to
MSMEs.
DBT in the M/o MSME
 To ensure accurate targeting of beneficiaries, simpler and faster flow
of funds, de-duplication, reduction of fraud
 About 20 schemes included under the DBT Cell
 Credit in cash, kind or composite (i.e. cash and kind) based on the
benefit type to the beneficiary’s account
Govt. facilitations for growth of MSMEs
 Digital Payments – Promote cash less economy and seamless
payment in a convenient, easy, affordable quick and secured manner
S.No. Name of the organisation No. of Digital Value of Digital
Transactions (%) Transactions (%)
1 KVIC 82.20% 96.03%
2 NSIC 87.57% 96.06%
3 DC Office (Tool Room + DI 84.43% 95.33%
offices + HQ)
4 Coir Board 84.71% 95.18%
5 NIMSME 74.09% 60.89%
6 MGIRI 87.91% 95.46%
 Centralized Public Grievance Redress and Monitoring System
(CPGRAMS) – to attend to grievances and suggestions received
from MSMEs
Problems & Challenges of SME Units
 Increased competition from cheap Imports(China in particular).
 Infrastructural bottlenecks/ constraints
 Delayed Realization of Receivables.
 Delayed & Inadequate Institutional Credit.
 High Cost of Funds(Borrowing from Traditional Lenders at Prohibitive cost).
 Insistence for collateral or higher Margin by Banks/FIs
 Non availability of adequate Promoters contribution/ Capital/Equity.
 Banks lending Procedure complicated, lengthy & cumbersome
 Limited Financial Resources.
 Obsolete Technology, Low R &D, Negligible Technological Upgradation efforts.
 Lack of Managerial competence/Marketing Skills/Poor Marketing
 Low Quality Image/Perception
 Lack of proactive response from Government Departments
Problems with SMEs from Lender’s Perspective
 High Incidence of Sickness/NPA’s Level
 Lack of Entrepreneurship/Lack of Managerial Skills & Knowledge
 Infrastructural constraints
 Competitive Environments/ Lack of Marketing Skills
 Lack of Credit Information/Asymmetry of Information.
 Obsolete Technology/Inertia towards Technological Upgradation
 Multi Agencies overseeing Growth of MSME Sector
 Diversion of Funds/Over Trading
 Inadequate reach of Banks to SME Units (Rural / Remote places)
 Improper Maintenance of Financial Transactions/Records/Reports
 Fudging of relevant Business Data for seeking Credit Limits
 Budget 2022-23 Highlights for MSMEs

• Udyam, e-shram, NCS and ASEEM portals to be interlinked

• 130 lakh MSMEs provided additional credit under Emergency Credit Linked
Guarantee Schemes (ECLGs)

• ECLGS to be extended up to March 2023

• Guarantee cover under ECLGs to be expanded by Rs 50,000 Crore to total

cover of Rs 5 lakh Crore

• Rs. 2 lakh Crore additional credit for Micro and Small Enterprises to be
facilitated under the Credit Guarantee Trust for Micro and Small Enterprises (
CGTMSE)

• Raising and Accelerating MSME performance (RAMP) programme with outlay

of Rs 6000 Crore to be rolled out
 Budget 2022-23 Highlights for MSMEs

FY 21-22 FY 22-23
The Prime Minister Employment Rs 12,499.70 crore Rs 17,600.12 crore
Generation Programme (PMEGP)
Interest Subvention Scheme for Rs 199.66 cr Rs 0.04 crore
Incremental Credit to MSMEs
Distressed Assets Fund Rs. 300 Cr Rs 100 crore

Guarantee Emergency Credit Line Rs 10,000 crore Rs 15,000 crore

(GECL
Entrepreneurship and skill Rs 570.93 cr Rs 717.99 Crore
development schemes
the Fund of Funds Rs 350 crore Rs 486 crore

Mahatma Gandhi Institute for Rs 7.5 crore Rs 10.41 crore

Rural Industrialisation
Promotional Services Institutions Rs 176.70 crore Rs 182.82crore
and Programme
Total-Infrastructure Development Rs 1,107.63 crore Rs 1,596.03 cr
Programme
research and evaluation studies Rs 175.64 crore Rs 157 crore
RECAPITULATION
1. In accordance with new definition of MSME,
the ceiling for investment in Plant &
Machineries and Turnover for MICRO
Industries has been revised to: -
1. Rs 1 cr and 5 crs
2. Rs 50 lakhs and 3 crs
3. Rs 25 lakhs and 2crs
4. Rs 10 lakhs abd 1 crores
2. New MSME definitions take effect
from: -

1. July 31,2020.
2. August 1, 2020.
3. July 1, 2020 .
4. May 13, 2020
5. None of the above
3. Guaranteed Emergency Credit Line
is operationalized through:-

1. CGTMSE
2. NCGTC
3. DICGCI
4. None of the above
4. Guarantee under Emergency Credit
Line has been enhanced up-to :

1. Rs500000 crores
2. Rs300000 crores
3. Rs450000 crores
4. Rs250000 crores
5. In the new definition of MSME, export
turnover are not taken into account for
computing total turnover :
1. True
2. False
3. None of the above
6. Guarantee under Emergency Credit
Line will be valid till :-

1. 31.03.2022
2. 30.09.2023
3. 31.03.2023
7. Risk weight of outdgcredit under
GECL is

1. 150%
2. 100%
3. 75%
4. 0%
8. Which of the following scheme has
been introduced during pandemic to
extend additional credit facilities to the
MSMEs
1. PMMY
2. PMEGP
3. GECL
4. CLCSS
5. Stand –Up India