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Principles & Practices of Banking

Unit – 22 : Micro, Small and Medium Enterprises in India

1. A credit guarantee scheme was started to provide collateral-free loans to micro and small entrepreneurs.

2. The exemption limit for relief from payment of Central Excise duty was raised to Rs 1 crore.

3. The MSMED Act (Micro, Small and Medium Enterprise Development Act) 2006 came into effect from 2 Oct 2006.

4. Credit to MSMEs is part of the priority sector lending policy of the banks. Refer to Lesson 18 (1-3). Any shortfall in the 10 % limit of MSMEs of the 32 % prescribed limit of priority sector for foreign banks has to be deposited in the SEDF (Small Enterprise Development Fund) set up by SIDBI.

5. The principal financial institution for promotion, financing and development of the MSME sector is the SIDBI.

6. If the buyer of the goods fails to make the payment to the supplier within a period of 45 days, the buyer shall be liable to pay compound interest to the supplier on the amount with monthly interest at 3 times of the bank rate.




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