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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

RBI issues FAQs on Micro, Small and Medium Enterprises

29-Jul-2025 | NA

Reserve Bank of India (RBI) has issued FAQs on Micro, Small and Medium Enterprises. Key Highlights: 1. MSME Classification: a. Micro: Investment - Rs. 2.5 crore, Turnover - Rs. 10 crore b. Small: Investment - Rs. 25 crore, Turnover - Rs. 100 crore c. Medium: Investment - Rs.125 crore, Turnover - Rs. 500 crore d. Must register on the Udyam Portal and obtain an Udyam Registration Certificate. 2. Support for Informal Micro Enterprises (IMEs): a. IMEs without PAN or GSTIN can register via the Udyam Assist Platform (UAP) with help from RBI-regulated institutions. b. Udyam Assist Certificate is treated equal to Udyam Registration for Priority Sector Lending (PSL) benefits. 3. Bank Lending Guidelines: a. All loans to MSMEs qualify under PSL. b. 7.5% sub-target of total credit for micro enterprises is mandated. c. Banks must evaluate working capital based on business cycles and turnover. 4. Collateral-Free Loans & Credit Guarantee: a. Banks cannot demand collateral for loans up to ?10 lakh. b. CGTMSE Scheme offers guarantee cover (up to ?10 crore) to lenders for collateral-free loans. 5. Delayed Payment Protection: a. Buyers must pay MSMEs within 45 days. b. Delays attract compound interest at 3x RBI Bank Rate. c. Disputes are handled by State MSME Facilitation Councils. 6. Revival & Rehabilitation Framework: a. Early warning system (SMA 0/1/2) to detect financial stress in MSMEs. b. Banks must take corrective actions: Rectification, Restructuring, or Recovery. c. Applies to accounts with credit limits up to Rs. 25 crore. 7. Other Key Initiatives: a. Trade Receivables Discounting System (TReDS) enables MSMEs to quickly receive payments. b. Banks must decide on MSME loan applications up to Rs. 25 lakh within 14 working days. c. MSMEs can also access RSETIs and Financial Literacy Centres for training and support. For more information, please refer to the attached document.

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