{"id":15327,"date":"2019-04-10T11:00:07","date_gmt":"2019-04-10T05:30:07","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=15327"},"modified":"2019-05-27T18:03:23","modified_gmt":"2019-05-27T12:33:23","slug":"banks-rework-funding-strategies-for-msme","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/banks-rework-funding-strategies-for-msme\/","title":{"rendered":"Banks Rework Funding Strategies for MSMEs\ufeff"},"content":{"rendered":"

India’s Micro, Small, and Medium Enterprises (MSMEs) are a large and growing market<\/a>, employing about 60 million people in approximately 26 million enterprises. MSMEs in India contribute 8 % to the GDP. The whole MSME<\/a> sector is the nursery for entrepreneurship driven by innovation and creativity. With the governments ‘Make in India’, there has been a significant jump in the FDI flow. Due to this, the MSMEs sector is poised to get bigger in India. In this article, we will discuss Banks Rework Funding Strategies for MSMEs.<\/p>\n\n\n\n

If\nwe look at the official estimates, there are a total of about 63 million micro,\n.33 million small, and about 5,000 medium enterprises in India, with Uttar\nPradesh having the highest percentage of MSMEs in the country. <\/p>\n\n\n\n

In this article, we’ll be discussing MSME’s under the MSME Development Amendment<\/a> Bill, 2018, the benefits available to an MSME in India, how do we register MSME in India, the new bank reforms for MSMEs and the evolving needs of MSME in India<\/a>.<\/p>\n\n\n\n

The New definition <\/strong><\/h2>\n\n\n\n

Prior to 1991, the industries were divided into mainly two blocks i.e. large and small. For establishing a large industry, one needed a license and for a small scal<\/g>, industry license was not required. <\/p>\n\n\n\n

In\n2006, under the MSME Development Act Section 7, a more comprehensive definition\nwas given to MSMEs. The enterprises are now divided into two categories-<\/p>\n\n\n\n

  1. Manufacture\nEnterprises- “These enterprises are\nengaged in the manufacture and the production of goods pertaining to Industries\nmentioned under the first schedule of Industries (Development and Regulation)\nAct, 1951 or the employ plant and machinery in the procedure of value added to\nthe final product having distinct name\/character\/use.”<\/li>
  2. Service\nEnterprises- “These enterprises are\nengaged in providing or rendering of services and are defined in terms of\ninvestment in equipment.”<\/li><\/ol>\n\n\n\n

    Both the categories are further categorized into micro, small and medium enterprises based on the investment in the plant and machinery equipment.<\/p>\n\n\n

    Under the MSME Development (Amendment) Bill, 2018, introduced by MSME Minister Giriraj Singh, any business having a total turnover up to ₹5 crore will be deemed to be a ‘micro enterprise’. The other slabs consist of ₹5-75 crore for ‘small enterprise’ and ₹75-250 crore for ‘medium enterprise.<\/p>\n

     <\/div>\n\n\n

    MSMEs in India are grouped into the\nfollowing categories- <\/strong><\/h2>\n\n\n\n\n\n\n\n\n\n
    Nature of activity of the Enterprise<\/th>\nInvestment in plant and machinery excluding land and building for enterprises engaged in manufacturing or production, processing or preservation of goods<\/th>\nInvestment in equipment excluding land and building for enterprises engaged in providing or rendering of services (loans up to Rs 1 crore)<\/th>\n<\/tr>\n
    Micro<\/td>\nNot exceeding 25 Lakhs<\/td>\nNot exceeding 10 Lakhs<\/td>\n<\/tr>\n
    Small<\/td>\nMore than Rs.25 lakhs but does not exceed Rs.500 lakhs<\/td>\nMore than Rs.10 lakhs but does not exceed Rs.200 lakhs<\/td>\n<\/tr>\n
    Medium<\/td>\nMore than Rs.500 lakhs but does not exceed Rs.1000 lakhs<\/td>\nMore than Rs.200 lakhs but does not exceed Rs.500 lakhs<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n

    What are the benefits available?<\/strong><\/h2>\n\n\n\n

    The\ngovernment has initiated measures for allowing easier access to funds and\nmodernization of the MSME sector. These schemes ensure quality products,\ntechnology up gradation, credit linked subsidy and UID linked scheme for\ngetting subsidy easily.<\/p>\n\n\n\n

    Some\nof the other benefits available to the MSMEs are listed below:<\/p>\n\n\n\n