Consider the following statements with reference to India: 1. According to the 'Micro Small and Medium enterprises Development (MSMED) Act, 2006, the 'medium enterprises' are those with investments in plant and machinery between Rs. 15 crore and Rs. 25 crore. 2. All bank loans to the Micro, Small and Medium Enterprises qualify under the Priority sector. Which of the statements given above is/are correct?

QUESTION

Medium

Economy

Prelims 2023

Consider the following statements with reference to India:

According to the 'Micro Small and Medium enterprises Development (MSMED) Act, 2006, the 'medium enterprises' are those with investments in plant and machinery between Rs. 15 crore and Rs. 25 crore.
All bank loans to the Micro, Small and Medium Enterprises qualify under the Priority sector.

Which of the statements given above is/are correct?

Select an option to attempt

Explanation

Statement 1 is incorrect: The statement claimed the range for a 'Medium' enterprise is between ₹15 crore and ₹25 crore. In reality, a Medium enterprise is defined by an investment of up to ₹50 crore (specifically more than ₹10 crore) and a turnover of up to ₹250 crore. The figures in the statement do not match any official bracket.

Statement 2 is correct: According to the RBI Master Direction on Priority Sector Lending (PSL), all bank loans to MSMEs (Micro, Small, and Medium) qualify for classification under the priority sector. This ensures these enterprises receive a dedicated portion of bank credit to foster economic growth and employment.

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