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 ₹15 crore and ₹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?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Explanation:
The first statement is incorrect. The classification of Micro, Small and Medium Enterprises is defined under the MSMED Act 2006 amendment dated 01/06/2020. The Micro, Small and Medium Enterprises is based on the Investment in Plant, Machinery or Equipment values (excluding land and building) which does not exceed fifty crore rupees and Annual Turnover.
The second statement is incorrect. All Bank loans to MSMEs, for both manufacturing and service sectors, are eligible to be classified under the priority sector as per the norms provided by the RBI.
So the correct answer would be (d) Neither 1 nor 2.
