MSME is defined as per RBI/GOI Definition, which is as follows

MSME constitutes:

Manufacturing Sector

Services Sector

Manufacturing Sector

Manufacturing sector refers to enterprises engaged in manufacture or production,

processing or preservation of goods. Please refer First Schedule to the Industries

(Development and Regulation) Act, 1951 for the list of eligible industries engaged in the

manufacturing sector. The definition of Micro, Small and Medium Enterprises under the

manufacturing sector is as below:

i. A micro enterprise is an enterprise where investment in plant and machinery [original

cost excluding land and building and the items specified by the Ministry of Small Scale

Industries vide its notification No. S.O. 1722(E) dated October 5, 2006 does not exceed

Rs. 25 lakh;

ii. A small enterprise is an enterprise where the investment in plant and machinery

[original cost excluding land and building and the items specified by the Ministry of

Small Scale Industries vide its notification No. S.O. 1722(E) dated October 5, 2006] is

more than Rs.25 lakh but does not exceed Rs.5 crore; and

iii. A medium enterprise is an enterprise where the investment in plant and machinery

(original cost excluding land and building and the items specified by the Ministry of

Small Scale Industries vide its notification No. S.O. 1722(E) dated October 5, 2006) is

more than Rs.5 crore but does not exceed Rs.10 crore.

Services Sector

Services sector refers to enterprises engaged in providing or rendering of services. These

will include small road & water transport operators (owning a fleet of vehicles not

exceeding ten vehicles), small business (whose original cost price of the equipment

used for the purpose of business does not exceed Rs.20 lakh) and professional & self

employed persons (whose borrowing limits do not exceed Rs.10 lakh of which not more

than Rs.2 lakh should be for working capital requirements except in case of

professionally qualified medical practitioners setting up of practice in semi-urban and

rural areas, the borrowing limits should not exceed Rs.15 lakh with a sub-ceiling of Rs.3

lakh for working capital requirements). The definition of Micro, Small and Medium

Enterprises under the services sector is as below:

i. A micro enterprise is an enterprise where the investment in equipment does not

exceed Rs.10 lakh;

ii. A small enterprise is an enterprise where the investment in equipment is more than

Rs.10 lakh but does not exceed Rs.2 crore; and

iii. A medium enterprise is an enterprise where the investment in equipment is more than

Rs.2 crore but does not exceed Rs.5 crore.

SME Defined

The Micro, Small and Medium Enterprises in Manufacturing and service sector are

defined by Reserve Bank of India as under as per MSMED ACT, 2006 -

Particulars Investment(*) in Plant & Machinery

Manufacturing Enterprises

Investment(#) in Equipments

Service Sector Enterprises

Micro Enterprises <= 25 lacs <=10 lacs

Small Enterprises >25 lacs & <= 500 lacs >10 lacs & <=200 lacs

Medium Enterprises >500 lacs & <=1000 lacs >200 lacs & <=500 lacs

(*) Investment in terms of original cost excluding land and building and the items

specified by the Ministry of Small Scale Industries vide its notification no. S.O. 1722 (E)

dated October 5, 2006

(#) original cost excluding land and building and furniture, fittings and other items not

directly related to the service rendered or as may be notified under the MSMED Act,

2006.

The Small and Micro (service) enterprises shall include small road & water transport

operators, small business, professional & self-employed persons, and all other service

enterprises engaged in activities, viz., consultancy services including management

services, composite broker services in risk and insurance management, third party

administration services (TPA) for medical insurance claim for policy holders, seed

grading services, training-cum-incubator centre, educational institutions, training

institutes, practice of law i.e. legal services, placement and management consultancy

services, advertising agency, trading in medical instruments, retail trade, training

centres, etc and which satisfy the definition of micro and small (service) enterprises in

respect of investment in equipment whose original cost price of the equipment used for

the purpose of business does not exceed Rs.10 lakh and Rs.2 crore respectively.

In Addition to above, the bank also selectively classifies certain business segments as

part of SME lending. The Channel funding/Vender financing is part of SME irrespective

of the obligor.

Micro and Small Enterprise Charter

The branches would give acknowledgement (with date of receipt and running

serial number) on the duplicate of the application received.

All loan applications for Micro and Small Enterprise up to a credit limit of Rs.

25,000 would be disposed of within 2 weeks and those up to Rs. 5 lacs within 4

weeks provided the loan applications are complete in all respects and

accompanied by a 'check list'. These time limits of 2 weeks /4 weeks are outer

limits only and we would endeavor to dispose of loan applications at the earliest.

While no collateral will be required for limit upto Rs. 5 lacs in the case of Micro

and Small Enterprise units, collateral for limits above Rs 5 lacs and upto Rs 25 lacs

would be called for, if considered necessary.

The Bank has already registered as Member Lending Institution with Credit

Guarantee Fund Trust Scheme for Small Industries (CGTSI) launched by SIDBI,

which provides guarantee cover of 75 % of the amount of default, in respect of

facilities upto Rs 25 lacs, without collateral security and/or third party guarantee.

A schematic product Zero Collateral Loans to SSI is available.

A composite loan limit of Rs 1 crore may be sanctioned to enable the Micro and

Small Enterprise entrepreneurs to avail of their working capital and term loan

requirement through Single Window.

A unit is considered as sick when any of the borrowal accounts of the unit

remains substandard for more than 6 months or there is erosion in the net worth

due to accumulated cash losses to the extent of 50% of its net worth during the

previous accounting year and the unit has been in commercial production for at

least two years. The rehabilitation package should be fully implemented within six

months from the date the unit is declared as potentially viable/viable. During this

six months period of identifying and implementing rehabilitation package we

may do "holding operation" which will allow the sick unit to draw funds from the

cash credit account at least to the extent of deposit of sale proceeds. Following

are broad parameters for grant of relief and concessions for revival of potentially

viable sick Micro and Small Enterprise units:

Interest on

Working Capital

Interest 1.5% below the prevailing fixed / prime lending rate,

wherever applicable

Funded Interest

Term Loan Interest Free

Working Capital

Term Loan

Interest to be charged 1.5% below the prevailing fixed / prime

lending rate, wherever applicable

Term Loan

Concessions in the interest to be given not more than 2 % (not

more than 3 % in the case of tiny / decentralized sector units)

below the document rate.

Contingency Loan

Assistance The concessional rate allowed for Working Capital Assistance

We also provide loans under Technology Upgradation Fund Scheme (TUFS) for

Textile and Jute Industrial units in Micro and Small Enterprise sector and to 21

Specified Industries in Micro and Small Enterprise sector for technology

upgradation under Credit Linked Subsidy Scheme (CLCSS).

Repayment programme would be fixed taking into account the sustenance

requirements, surplus generating capacity, the break-even point, the life of the

asset, etc., and not in an "ad hoc" manner. In respect of composite loan up to

Rs. 50,000 to artisans, village and cottage industries, repayment schedule may

be fixed for term loan component only, subject to SIDBI's requirements being

fulfilled. In the case of other borrowers affected by natural calamities, we may

convert drawings in excess of the value of security into a term loan repayable

over a reasonable period of time and provide further working capital and

extend/re-phase the installments due under term loans.

The rates of interests charged to Micro and Small Enterprise units will be linked to

their ratings (internal) and subject to the Bank's guidelines/Corporate Credit

Policy. The interest rates on loans upto Rs 2 lacs will not exceed BPLR. While no

penal interest will be charged for loans under priority sector upto Rs. 25,000

charging of penal interest in other cases will be as per the Bank/s guidelines.

While there will be no service charges/inspection charges on priority sector loans

upto Rs. 25,000, levy of such charges in other cases will be as per the Bank's

guidelines. We may waive insurance of assets in the following cases:

We may waive insurance of assets in the following cases:

No. Category Type of

Risk Type of Assets

(a) All categories of priority sector advances upto and

inclusive of Rs. 10,000

Fire &

other

risks

Equipment and

current assets

(b)

Advances to SSI sector upto and inclusive of Rs.

25,000 by way of -

Composite loans to artisans, village

and cottage industries Fire Equipment and

current assets

All term loans Fire Equipment

Working capital where these are

against non-hazardous goods Fire Current Assets