(i) enhance the existing limit for investment in plant and machinery considering changes in price index and cost of inputs consistent with the emerging role of the MSMEs in various Global Value Chains, (ii) include medium enterprises apart from small enterprises in section 7(9) to enable the aforesaid category of enterprises to avail the benefits and become competitive, and (iii) empower the Central Government to revise the existing limit for investment, by notification, considering the inflation and dynamic market situation.

1. MSME Amendment Bill, 2015
Part 3
MSME Financing - Key Issues and Solutions

2. MSME Amendment Bill, 2015
The Ministry of Micro, Small and Medium Enterprises Development
(Amendment) Bill, 2015 envisages to
(i) enhance the existing limit for investment in plant and machinery
considering changes in price index and cost of inputs consistent with the
emerging role of the MSMEs in various Global Value Chains,
(ii) include medium enterprises apart from small enterprises in section 7(9) to
enable the aforesaid category of enterprises to avail the benefits and become
competitive, and
(iii) empower the Central Government to revise the existing limit for
investment, by notification, considering the inflation and dynamic market
situation.

3. MSME Amendment Bill, 2015
As per Micro, Small and Medium Enterprises Development (Amendment) Bill,
2015, the investment limit prescribed for Micro, Small and Medium
Enterprises (MSMEs) in the country, is proposed as under:
Manufacturing enterprises:
i. Micro enterprise: Investment in plant and machinery does not exceed
fifty lakh rupees
ii. Small enterprise: Investment in plant and machinery is more than fifty
lakh rupees but does not exceed ten crore rupees.
iii. Medium enterprise: Investment in plant and machinery is more than ten
crore rupees but does not exceed thirty crore rupees.

4. MSME Amendment Bill, 2015
Service enterprises:
i. Micro enterprise: Investment in equipments does not exceed twenty lakh
rupees.
ii. Small enterprise: Investment in equipments is more than twenty lakh
rupees but does not exceed five crore rupees.
iii. Medium enterprise: Investment in equipments is more than five crore
rupees but does not exceed fifteen crore rupees.

5. Rehabilitation Policy Framework for
Sick MSME Units
Rehabilitation Policy Framework for Sick MSME Units
The Reserve Bank of India has come up with a revised framework for revival
and rehabilitation of Micro, Small and Medium Enterprises so that incipient
sickness can be detected by banks in the units and a corrective action plan
can be set in motion for them.
The revised framework, which supersedes RBI’s earlier guidelines on
rehabilitation of sick micro and small enterprises, is applicable to MSMEs
having loan limits up to ₹25 crore, including accounts under consortium or
multiple banking arrangement.

6. Rehabilitation Policy Framework for
Sick MSME Units
Corrective action plan (CAP) may include rectification. The RBI said before a
MSME turns into a non-performing asset, banks should identify incipient
stress in the account by creating three sub-categories under the special
mention account (SMA). Under the SMA-0 sub-category, principal or interest
payment is not overdue for more than 30 days but account showing signs of
incipient stress; SMA-1 (principal or interest payment is overdue between 31-
60 days); and SMA-2 (principal or interest payment is overdue between 61-90
days).
On the basis of these early warning signals, the branch maintaining the
account should consider forwarding the stressed accounts with aggregate
loan limits above ₹10 lakh to the Committee (for Stressed Micro, Small and
Medium Enterprises) within five working days for a suitable corrective action
plan (CAP). Forwarding the account to the Committee for CAP will be
mandatory in cases of accounts reported as SMA-2.

7. Rehabilitation Policy Framework for
Sick MSME Units
As regards accounts with aggregate loan limits up to ₹10 lakh identified as
SMA-2, the account should be mandatorily examined for CAP by the branch
itself under the authority of the branch manager / such other official as
decided by the bank in terms of their Board approved policy. However, the
cases, where the branch manager / designated official have decided the
option of recovery under CAP instead of rectification or restructuring, should
be referred to the Committee for their concurrence.

8. Rehabilitation Policy Framework for
Sick MSME Units
Any MSME borrower may voluntarily initiate proceedings under this revised
framework, if the enterprise reasonably apprehends failure of its business or
its inability or likely inability to pay debts or there is erosion in the net worth
due to accumulated losses to the extent of 50 per cent of its net worth during
the previous accounting year, by making an application to the branch or
directly to the Committee. When such a request is received by the lender, the
account with aggregate loan limits above ₹10 lakh should be referred to the
Committee. The Committee should convene its meeting at the earliest but
not later than five working days from the receipt of the application, to
examine the account for a suitable CAP.

9. Rehabilitation Policy Framework for
Sick MSME Units
The accounts with aggregate loan limit up to ₹10 lakh may be dealt with by
the branch manager / designated official for a suitable CAP. The RBI said the
Board approved policy to operationalize the framework may be put in place
by the banks not later than June 30, 2016.

10. THANK YOU
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