The RBI has asked the banks, financial institutions, and NBFCs to reclassify MSMEs (micro, small and medium enterprises) on the basis of the new criteria.
New criteria for classification of micro, small, and medium enterprises(MSMEs) on the basis of turnover and investment in plant and machinery has been notified by the government last month.
“We advise you to initiate necessary action for reclassification of enterprises as per the new definition w.e.f July 1, 2020, and issue necessary instructions to your branches/controlling offices in this regard, at the earliest,” RBI said in a communication to banks, financial institutions and non-banking financial companies (NBFCs).
After 14 years since the MSME Development Act came into existence in 2006, a revision in MSME definition was announced in the Atmanirbhar Bharat package on May 13.
The Reserve Bank further said in case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise will maintain its prevailing status till the expiry of one year from the close of the year of registration.
As per the revised definition, an enterprise is a micro where the investment in plant and machinery or equipment does not exceed Rs 1 crore and turnover does not cross Rs 5 crore.
An enterprise is now classified as a small enterprise, where the investment in plant and machinery or equipment does not exceed Rs 10 crore, and turnover is not over Rs 50 crore.
The death toll from coronavirus rose to 18,213, including 379 fatalities in 24 hours. According to figures released by the health ministry, currently, there are 2,27,439 active coronavirus cases in the country and the gap between recovered patients and active cases has now widened to 1,52,452.