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 are correct? 

(a) 1 only 

(b) 2 only 

(c) Both 1 and 2 

(d) Neither 1 nor 2 

Ans: b

Explanation:

Central Government,  notified the following criteria for classification of micro, small and medium enterprises, namely:— 

(i) a micro enterprise, where the investment in Plant and Machinery or Equipment does not exceed one crore rupees and turnover does not exceed five crore rupees;

(ii) a small enterprise, where the investment in Plant and Machinery or Equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees;   

(iii) a medium enterprise, where the investment in Plant and Machinery or Equipment does not exceed fifty crore rupees and turnover does not exceed two hundred  and fifty crore rupees.  

Now, there will be no difference between manufacturing and service sectors.

All bank loans to MSMEs, engaged in providing or rendering of services as defined in terms of investment in equipment under MSMED Act, 2006, shall qualify under priority sector without any credit cap.

Hence, statement 1 is incorrect & 2 is correct.

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