Micro Small & Medium Enterprises –

General Guidelines

LKMC
 Significance of MSME in Indian Economy
 CONTRIBUTION TO INDIAN ECONOMY:
 28.90 % to GDP during year 2018-19

 Above 45% to MANUFACTURING OUTPUT

 Above 40% to EXPORTS. (MSME Annual Report

2018-19).

 11.1 crore JOBS created ( NSS 73rd Round (2015-

16)

 Produces diverse range of products and services.

LKMC
 MSME - DEFINITION
Definition :Earlier Definition under MSME Dev. Act, 2006
Modified as per GOI Gazette Notification wef from 01/07/2020.

Category Investment in P&M Turnover

or Equipment

Micro Enterprise Not exceeding Not exceeding Rs.

Rs. 1 crore 5 crore

Small Enterprise Not exceeding Not exceeding Rs.

Rs. 10 crore 50 crore

Medium Enterprise Not exceeding Not exceeding Rs.

Rs. 50 crore 250 crore

LKMC
 COMPOSITE CRITERION FOR
CLASSIFICATION
 A composite criterion of investment and turnover
shall apply for classification of an enterprise as:
 Micro / Small / Medium.

 If an enterprise crosses the ceiling limits specified for

its present category in either of the two criteria of
investment or turnover,
 it shall be placed in the next higher category.

 An enterprise shall NOT be placed in the lower

category
 unless it goes below the ceiling limits specified for its
present category in both the criteria.

LKMC
 MSME -DEFINITION
 Calculation of Turnover :
 Exports shall be excluded while
calculating the turnover of any enterprise
for the purposes of classification.

 Calculation of Investment: The value of

P&M or Equipment shall mean the written
down value (WDV) as at the end of the FY

LKMC
 MSME -DEFINITION
 All units with GSTIN no. listed against the same 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

LKMC
 MSME -DEFINITION
 Calculation of investment in P&M or equipment: will
be linked to ITR of previous years.

 In case of a NEW enterprise, where no prior ITR is

available, the investment will be based on self-
declaration basis and such relaxation shall end after
the 31st March of the FY in which it files its first ITR.
 in such case, the purchase value of a P&M or
equipment shall be considered excluding GST

LKMC
 MSME-DEFINITION
 To establish an MSME enterprise:
 one may file Udyam Registration online
 in the Udyam Registration portal,
 on self-declaration basis without the need to
upload documents.

 On registration, the enterprise will be

 assigned “Udyam Registration Number” &
 issued “Udyam Registration Certificate”

 Retail and Wholesale trade are now included as

MSMEs

LKMC
 MSME - DEFINITION
 In case of an UPWARD CHANGE in INVESTMENT
or TURNOVER or BOTH, and consequent re-
classification, an ENTERPRISE shall CONTINUE to
AVAIL ALL NON-TAX BENEFITS of the category
(micro or small or medium) it was in before the
reclassification, for 3 years from the date of such
upward change

 In case of DOWNWARD CHANGE of an enterprise,

the enterprise will CONTINUE in its PRESENT
CATEGORY till the closure of the FY.

LKMC
 PRIORITY SECTOR LENDING
TARGETS
 Micro Enterprises  7.5% of ANBC or Credit
Equivalent Amount of Off Balance Sheet Exposure
whichever is higher.

 Lending to Khadi and Village Industries: will be

treated as for lending for Micro Enterprises.

 All financing to MSME Enterprises will qualify as

Priority Sector Lending.

LKMC
 MSME TARGET BY PM TASK
FORCE
Target by PM Task Force on MSMEs for banks:

 20% YOY growth in credit to MSEs.

 10% annual growth in no. of Micro enterprises

accounts.

 60% of total lending to MSEs as of the corresponding

quarter of previous year should be to Micro
Enterprises.

LKMC
 MSME Loan Application Forms

Loan Applications for service sector:

PNB-1166 for loans upto Rs. 100 Lakh

PNB-1016 for loans over Rs. 100 Lakh to Rs. 200 Lakh

PNB-1017 for loans over Rs. 200 Lakh.

Loan Applications for Manufacturing Sector :

PNB-1016A for loans upto Rs. 200 Lakh

PNB-1017A for loans over Rs. 200 Lakh

LKMC
 MSME - TAT

 Maximum time limit for disposal of MSE Loans :

PROPOSAL (AMOUNT) MAX. TIME

UPTO 5 LAC 2 WEEKS

ABOVE 5 LAC & UPTO 25 LAC 3 WEEKS

ABOVE 25 LAC 6 WEEKS

 The same to be conveyed in acknowledgement to the

loan application.

LKMC
 MSME - TAT
 Time Norms (Medium Enterprises)
PROPOSAL (AMOUNT) MAXIMUM TIME

UPTO 2 LAC 2 WEEKS

ABOVE 2 LAC & UPTO 50 LAC 4 WEEKS

ABOVE 50 LAC & UPTO 100 LAC 5-6 WEEKS

ABOVE 100 LAC & UPTO 100 6-7 WEEKS

CRORE

ABOVE 100 CRORE 8-9 WEEKS

LKMC
 MSME Loans up to Rs. 10 lakh:

 Banks are mandated not to accept collateral security in

the case of MSME loans up to ₹10 lakh.

 Loans upto Rs 10 lakh to MSEs which are eligible for

coverage under Credit Guarantee Schemes are to be
covered under guarantee scheme without accepting
any collateral security / third party guarantee.

 Banks may, on the basis of good track record and

financial position of the MSE units, increase the limit to
dispense with the collateral requirement for loans up to
Rs.25 lac (with the approval of the appropriate
authority).

LKMC
 MSME – COLLATERAL SECURITY
Loan amount above Rs.10 lakh :

 Where collateral security is available, Incumbents

in all the scales are empowered to sanction the
loans, as per extant guidelines.

 However, respective sanctioning authority is

empowered to cover eligible loans upto ₹ 500 Lakh
under CGTMSE guarantee , on merits of the case.

LKMC
 DISCOUNT IN PROCESSING FEES

 Bank guidelines also provide that MSME

category of borrowers will be given 20%
discount in processing / upfront fee in case
their applications are received online.
( IRMD L&A Cir No.40/2020)

LKMC
 MSME – PNB SCORE SME
for evaluating loan proposals under MSME (Manufacturing /
Service) category up to limits of Rs. 100 lac, bank has
developed following 5 Credit Scoring Models:
Credit scoring models Loan limits
MSME Manufacturing (New Cases Above Rs.10 lac up to
including takeover) Rs.100 lac
MSME Service (New Cases including Above Rs.10 lac up to
takeover) Rs.100 lac.
MSME Manufacturing and Service Rs.10 lac and below.
(New Cases including takeover)
MSME Mfg and Service (Renewal / Above Rs.10 lac up to
Enhancement) Rs.100 lac
MSME Manufacturing & Service Rs.10 lac and below.
(Renewal/Enhancement)

LKMC
 EXEMPTED FROM PNB SCORE SME
 All MSME accounts with sanctioned limits of Rs.2 lac
and below are exempted.

 MSME advances above Rs. 2 lac & upto Rs. 100 lac
to Traders & Professionally Qualified Medical
Practitioners are exempted from scoring under PNB
Score SME. These advances will be scored in PNB
Score (RAD).

 MSME Loans relating to the activities like advances to

Transport Sector and documentary films are exempted
from scoring. For such activities the guidelines for
credit risk rating issued by IRMD (Systems & Models),
HO shall be applicable.
LKMC
 Credit Guarantee Schemes
 Credit Guarantee Fund Trust for Micro and Small
Enterprises (CGTMSE): Loans sanctioned to Micro &
Small Enterprises upto 500 lac without collateral can
be covered under CGTMSE.

 Credit Guarantee Fund for Micro Units (CGFMU):

Loans sanctioned under MUDRA are covered under
CGFMU. In CBS, Code CGFMU has to be marked in
MIS details.

 Credit Guarantee Scheme for Stand Up India (CGSSI):

Loans sanctioned above 10 lac and upto 100 lac under
Stand up India without collateral security or third party
guarantee are covered under CGSSI. In CBS, Code
CGSSI has to be marked in MIS details.

LKMC
 Credit Guarantee Schemes
 Credit Guarantee Scheme for Subordinate debt (CGSSD):
personal loan is provided to the promoters of Stressed MSMEs,
for infusion as equity / quasi equity in the business eligible for
restructuring. Loans are provided with a 90% credit guarantee
by CGTMSE.

 Credit Linked Capital Subsidy Scheme (CLCSS): for

Technology Upgradation of Micro & Small Enterprises is
provided subject to following T&Cs:
(i) Ceiling on loan under the scheme is Rs.1 crore.
(ii) Rate of subsidy: 15% up to loan ceiling
(iii) Calculation of admissible subsidy: done wrt purchase price
of P&M.
(iv) SIDBI & NABARD: implementing agencies of the scheme.
LKMC
 PSB LOANS IN 59MINUTES
 Contactless loans to MSMEs

 In-principle approval of loans ranging from 1.00 Lac

to Rs 5 crore to GST registered MSME borrowers,

 Through portal ‘www.psbloansin59minutes.com’

within 59 minutes

 The applicant will get only In-principle approval and

the field functionaries are supposed to dispose of
the same after compliance of all bank guidelines

LKMC
 PNB MICRO LOANS PORTAL
 In-house Online portal of the bank for:

 in-principle approval of loans upto Rs 1 lac to

eligible MSME applicants.

 The minimum CIBIL score required for getting ‘In-

Principle’ approval is ‘690 and above’ and ‘-1’

 the applicant will get only In-principle approval and

the field functionaries are supposed to dispose of
the same after compliance of all bank guidelines

LKMC
 EASY RENEWAL
 menu “ERENEW1” for E-RENEWAL of Working
capital limit above Rs. 2 Lacs to Rs. 10 Lacs , &
“ERENEW” for WC limit upto Rs. 2 Lacs

 Renewal process will be completed in Finacle directly

through system, based on pre-defined business rules.

 25% concession in Processing Fee: for limits above

Rs. 5 Lac - Rs. 10 Lac for E-RENEWED a/c

 Refer MSME 19/2023

LKMC
 EASY RENEWAL
Renewal process will be initiated for all the eligible accounts where
limit is going to expire within 2 months as under:-

Date of Renewal SMS to Renewal will be Renewal date

next process customer marked by in the system
renewal will be will be system on
initiated sent on
Falling On a fix On a fix Within 7 days of The limit will
within next day/date of day/date of sending SMS to be marked as
2 months. current current the customer renewed on
month. month. the day of
renewal batch
run. However,
the renewal
start date will
be from the
actual date of
expiry of limit

LKMC
 EASY RENEWAL
 Easy Renewal process will be commenced 2 months prior
to limit expiry date and the batch process will be run after 3
days from the initiation of renewal process. While the limit
will get approved on the batch execution date, the renewal
will be effective only from the existing limit expiry date.
 For example if a limit is going to expire on 27.10.2024
 the system will initiate the renewal process on 01.09.2024,
 the limit marked as renewed in system on 04.09.2024 (as
renewal date in CBS),
 renewal applicable date will be 28.10.2024 (as applicable
date in CBS) and
 next renewal due date will be 27.10.2025.
 In case of Holiday on any particular day as mentioned
above, then the above actions will be initiated on next
working day.
LKMC
 GUIDELINES FOR E- RENEWAL
 Observations of the CIR : Satisfactory

 Date of Documents/BC Letter: not older than 24

months.

 Credit summation for last 12 months should be

≥200% of interest debited in the a/c during the
corresponding period.

 Past financials or projections need not be submitted

by the borrower for renewal

 No. of inward cheques returned due to financial

reasons during last 12 months should be less than 6.

LKMC
 GUIDELINES FOR E- RENEWAL
 After auto renewal but before the renewal effective
date, the unit visit should be conducted by the branch.

 Borrower should not be SMA -2 category as on date

of initiating process of renewal and as on date of
marking renewal in the system.

 no ZTL /FSI IR item pertaining to the account should

be pending for rectification.

 Borrower should not be classified as NPA during last

12 months.

LKMC
Thank
you
LKMC