This document discusses definitions and financing policies for micro, small, and medium enterprises (MSMEs) in India. It outlines that MSMEs are defined based on investment in plant and machinery, with micro enterprises having up to Rs. 25 lakhs investment for manufacturing and Rs. 10 lakhs for services. Banks are required to lend a minimum of 10-40% of their net credit to MSMEs. The document then provides details on various schemes and financing options available to MSMEs from banks, SIDBI, NSIC, and EXIM Bank for working capital, term loans, export assistance, and more.

1. MSME
– FINANCIAL INSTITUTIONS
POLICY PERSPECTIVES

2. MSMED DEFINITIONS
TYPE INVESTMENT IN PLANT & MACHINERY
Manufacturing Service Enterpise
MICRO Upto Rs. 25L Upto Rs.10L
SMALL Rs.25L -upto Rs.5 crore Rs.10L – upto Rs.2 crore
MEDIUM Rs.5 crore –upto Rs.10 crore Rs.2 crore –upto.Rs.5 crore

3. INDIA AND MSME ADVANTAGE
Demographic dividend
- 15-55 years of age population 56.9%
(as per Census 2011)
Consumer Credit Market growing @ 40% p.a.
Part of Statutory guidance on Priority Sector stipulated by
Government

4. - BANKS AND MSMEs---credit policy
 For Public Sector Banks
- 40% of Net Bank Credit (NBC)
- Min. 10% MSME
For Private Sector Banks
- 32% of NBC
- Min. 10% MSME

5. BANKS AND MSMEs-credit policy
Any short fall to be deposited in Small Enterprise Development
Fund (SEDF) of SIDBI.
Min. 20% year on year growth of MSMEs by 2015
Min. new 5 MSMEs to be covered by urban/semi – urban
branches.
Simplified uniform application forms upto Rs.5 lakhs for all
banks in the country.
 Setting up of specialized MSME branches and Central
Processing Cells for other branches.

6. BANKS AND PROMOTIONAL SERVICES
Technical Consultancy
- Techno – Economic feasibility studies
- Project preparation / validation
Entrepreneurship Development Programs
1. Sector / Activity Specific
- Electronics Services/Food Processing/Handicrafts
2. Target Group
- Campus Students
- Women
- VRS Employees
- Housewives

7. BANK CREDIT FOR MSMEs.
Time Standards
Proposals Sanction Period
Upto Rs. 2 lakhs 2 weeks
Upto Rs.5 lakhs 4 weeks
More than Rs.5 lakhs 6 weeks
Credit Rating and Uniform Appraisal

8. MSME – APPRAISAL REQUIREMENTS FINANCING
 Promoters Profile
- Qualifications / Experience
Techno Economic Viability
- Potential Market
Technology / Regulatory Standards / Product Uniqueness
Cost of Project and Funding
Financial Appraisal Indicators
- Debt Equity Ratio
- Debt Service Coverage Ratio (DSCR)
- Break Even Analysis

9. Special Appraisal Relaxations for MSMEs
Competitive Interest Rates – Rebate for women
Interest Subvention (Subsidy)
Credit Scoring Models–Interest / Security Concessions
- Simplified upto Rs.25 lakhs
Collateral Free Loans upto Rs.1 crore under Credit Guarantee
Trust for Micro and Small Enterprises.
L.U.Credit.Card. – Sanction valid for 3 years upto Rs.10 lakhs and
in special cases upto Rs.25 lakhs.
Fair Practices Code

10. Schemes & Products for MSME Financing
Capital Expenditure
1. General purpose Term Loan
- Upto Rs.2.50 crore
- Capital expenditure including R & D / Technology
up gradation of project cost
2. Deferred Payment Guarantee
- Against bills raised by manufacturer
3. Letter of Credit
- Import of machinery – Guarantee against
bills raised

11. Cont.
4. Vehicle Loans for enterprises
Car Loans for promoters
5. Construction Equipment Loan
- Loaders / Excavators / Cranes / etc.
 Government Schemes through SIDBI / NABARD
- 15% credit linked capital subsidy scheme towards
cost of project.
- Max. loan is Rs.1 crore

12. SERVICES SECTOR
Rice Mills / Dall Mills / Cotton Ginning Mills
Automobile Dealer Finance
Restaurants
Hospitals
Professionals
- Doctors / Engineers / Contractors / Commission
Agents
Education Institutions
Road and Water Transport Operators

13. WORKING CAPITAL FINANCE FOR MSMES
Appraisal upto Rs. 5 crore
1. Operating Cycle Estimates
OR
20% of Anticipated Turnover
Whichever is higher
2. Composite Loan Facility
- Term Loan + Working Capital
3. Open Cash Credit / Overdraft
4. Mortgage Loans for Composite Purpose

14. CREDIT GUARANTEE SCHEME (CGT SME) / GoI
Eligibility : Banks and other Financial Institutions
Category Max. extent of Guarantee
Upto Rs. 5 lakhs Above Rs.5L – 50L Above 50L – 100L
MICROENT 85% of AID
(Max. of Rs.4.25L)
75% of AID
(Max. of
Rs.37.50L)
Rs.37.50L + 50% of
above Rs.50L loan
(Max. Rs.62.50)
Women Entrepreneur Northeast Special Package
ALL OTHER SME 75%
(Max. 37.50 L)
Rs.37.50L + 50% of
above Rs.50L loan
(Max. Rs.62.50)

15. SMALL INDUSTRIES DEVELOPMENT BANK
OF INDIA (SIDBI) AND MSME
Direct Finance
- New / Existing units
Bills Finance
- Expansion / Modernization / Technology /
Diversification
Refinance
- Upto Rs.20 cr cost of project to Banks

16. SIDBI
International Finance (USD / Euro / Rs.)
- Preshipment – 180 days, margin 10-25%
- Postshipment – Bill financing
- Foreign Currency Loans
Energy Saving Projects
- 7 yrs loans
- Rs. 10L and above
Risk Capital
- Venture Capital

17. SIDBI
Women Enterprise Product Marketing (Marketing
Fund)
- Service providers incldg.
Supporting services
- internet, market intelligence,
advertising, market research, warehousing,
common testing centres

18. MARKETING ASSISTANCE
SIDBI
Vendor Development Scheme
- Under MOU with large corporates & MNCs and
Term Loans & Bill Financing
SME IT Loans
- Computerization – Hardware / Software
OTHERS
Technology Up gradation
Acquisition of ISO Certification

19. NSIC (National Small Industry Corporation)
- Market Development
Scheme
 Participation in International Exhibitions
- Reimbursement of 25% to 85% of air fare by
economy class.
- 25% to 75% rental for space.
- Max. Rs.1.25L per unit
Other Schemes
- Acquiring machinery & equipment upto Rs.5L
- Consortium marketing and securing bulk orders
- Financing 90 days raw material through bulk
purchase
- NSIC functioning as a leading export house
providing facilities
- Conducting exhibitions / trade fairs

20. EXIM BANK
 Pre-Shipment and Post –Shipment Credit
(FX & INR)
- Supplier credit through Indian exporter
(with recourse to exporter)
- Buyers’ credit - direct to overseas buyer without
recourse to exporter

21. EXIM BANK
NON-FUND BASED
Line of Credit (to Importers)
- Including Agricultural Commodities and Processed
Foods
 Guarantee on behalf of Exporters
Finance for Export – Oriented Companies
1. Project Finance
- Modernization / Expansion
2. Overseas Investment Finance
(For Joint Ventures / Wholly Owned Subsidiaries)
- Term Loans with Corporate Guarantee of Indian
Companies
- Equity Participation

22. EXIM BANK
SPECIAL PROGRAMS
Export Marketing Finance (for forward linkages)
 - Market Research
 - Participation in International Fairs
 - Quality Certification
 - Prospective Buyer visits to India
 - Preoperative Expenditure for overseas offices
Export Product Development
 Term Loan for product adaptation / Pilot Plants Product / Process
Development

23. EXIM BANK
EXPORT VENDOR DEVELOPMENT PROGRAM
Term loans, Export trading houses, Backward linkages for
production of export goods.
R & D FOR EXPORT PROMOTION