8/2/2019 Credit to Micro, Small and Medium Enterprises

1/10

Credit to Micro, Small andMedium Enterprises ( MSMEs )

PRESENTED BY :Reshma RajanRiba K. John

Rini Elsa Mathew

Sai Krishna Rajeev1

8/2/2019 Credit to Micro, Small and Medium Enterprises

2/10

Introduction Crucial to economic development.

Employment generation

Equitable distribution of National income

Regional dispersal of industries

Mobilization of capital and entrepreneurialskills

Enhancement of export earnings Wide range of products

2

8/2/2019 Credit to Micro, Small and Medium Enterprises

3/10

MSMEo Micro enterprises: Investment in Plant& machinery does not

exceed Rs.25 lakhs and investment in equipment does not

exceed Rs. 10 lakhs

o Small enterprises: Investment in P&M more than Rs.25lakhsbut do not exceed Rs. 5crores and in equipment more than 10

lakhs but does not exceed Rs. 2crores.

o Medium : Investment in P&M more than 5 crore but do notexceed 10 crore & Investment in equipment more than 2

crore and does not exceed Rs 5 crore. 3

8/2/2019 Credit to Micro, Small and Medium Enterprises

4/10

Credit to MSMEs

Code of Banks Commitment to MSMEs was formulated.

Credit linked Capital Subsidy scheme(CLCSS) for MSMEtechnological upgradation in 11th Five Year plan.

o Terms & Conditions:

Ceiling on the loan under the scheme would be Rs. 1crore

Rate of subsidy would be 15% for all MSME units uptothe loan ceiling

Calculation of admissible subsidy to be done withreference to the purchase price of P&M instead of theterm loan disbursed to the beneficiary unit.

SIDBI and NABARD to continue as the implementingagencies for the scheme. 4

8/2/2019 Credit to Micro, Small and Medium Enterprises

5/10

CREDIT TO KHADI AND VILLAGE INDUSTRIESCOMMISSION

A group of selected public sector banks wasformed with SBI as the leader of the group

Aimprovide credit to the Khadi and VillageIndustries Commission.

Loans1.5 % below the average primelending rate of 5 major banks in the group.

Rs. 306 crores - outstanding

5

8/2/2019 Credit to Micro, Small and Medium Enterprises

6/10

SCHEME FOR GUARANTEE OF LOANSAND ADVANCES TO SSIs Risk involved in lending to small units. Seminar on Financing of SSIlending can be

enlarged by enabling them to share risk withother agencies.

Government of India & RBIGuarantee Scheme Objectenlarge supply of institutional credit to

SSI units by granting a degree of protection to

the lending institutions against possible losses inrespect of such advances Element of refinancing

6

8/2/2019 Credit to Micro, Small and Medium Enterprises

7/10

Since its inception, working of schemereviewed & provisions have been liberalized.

Credit facilities granted to SSIs include: working capital advances

term loans

installment credits letters of credit

acceptances credit

deferred payment loan guarantees

7

8/2/2019 Credit to Micro, Small and Medium Enterprises

8/10

Credit guarantee scheme for smallborrowers Credit guarantee corporation established in January

1971. Merged with Deposit Insurance Corporation in 1978. Renamed as Deposit Insurance and Credit Guarantee

Corporation. Loans to small borrowers, self employed persons &

farmers. Amount of borrowing & scale of operations

considered. Scheme extended to loans granted by State Financial

Corporations & service cooperative societies.

8

8/2/2019 Credit to Micro, Small and Medium Enterprises

9/10

Differential Interest Rate Introduced in 1972

Implemented by all scheduled commercial banks in

India. Credit rate @ 4% p.a to weaker sections.

9

8/2/2019 Credit to Micro, Small and Medium Enterprises

10/10

10