MSME Banking

Gazette notification S.O. 2119(E) dated 26.06.2020

1. Classification of enterprises.-An enterprise shall be classified as a micro, small or medium enterprise on the basis of the following criteria, 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; and

   (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.

2. Becoming a micro, small or medium enterprise.—

   (1) Any person who intends to establish a micro, small or medium enterprise may file Udyam Registration online in the Udyam Registration portal, based on self-declaration with no requirement to upload documents, papers, certificates or proof.

   (2) On registration, an enterprise (referred to as ―Udyam‖ in the Udyam Registration portal) will be assigned a permanent identity number to be known as ―Udyam Registration Number.

   (3) An e-certificate, namely, ―Udyam Registration Certificate‖ shall be issued on completion of the registration process./p>

3. Composite criteria of investment and turnover for classification.--

   (1) A composite criterion of investment and turnover shall apply for classification of an enterprise as micro, small or medium.

   (2) If an enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category but no enterprise shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover.

   (3) All units with Goods and Services Tax Identification Number (GSTIN) listed against the same Permanent Account Number (PAN) shall be collectively treated as one enterprise and the turnover and investment figures for all of such entities shall be seen together and only the aggregate values will be considered for deciding the category as micro, small or medium enterprise.

4. Calculation of investment in plant and machinery or equipment.--

   (1) The calculation of investment in plant and machinery or equipment will be linked to the Income Tax Return (ITR) of the previous years filed under the Income Tax Act, 1961.

   (2) In case of a new enterprise, where no prior ITR is available, the investment will be based on self-declaration of the promoter of the enterprise and such relaxation shall end after the 31st March of the financial year in which it files its first ITR.

   (3) The expression ―plant and machinery or equipment‖ of the enterprise, shall have the same meaning as assigned to the plant and machinery in the Income Tax Rules, 1962 framed under the Income Tax Act, 1961 and shall include all tangible assets (other than land and building, furniture and fittings).

   (4) The purchase (invoice) value of a plant and machinery or equipment, whether purchased first hand or second hand, shall be taken into account excluding Goods and Services Tax (GST), on self-disclosure basis, if the enterprise is a new one without any ITR.

   (5) The cost of certain items specified in the Explanation I to sub-section (1) of section 7 of the Act shall be excluded from the calculation of the amount of investment in plant and machinery.

5. Calculation of turnover.--

   (1) Exports of goods or services or both, shall be excluded while calculating the turnover of any enterprise whether micro, small or medium, for the purposes of classification.

   (2) Information as regards turnover and exports turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN.

   (3) The turnover related figures of such enterprise which do not have PAN will be considered on self-declaration basis for a period up to 31st March, 2021 and thereafter, PAN and GSTIN shall be mandatory.

   (4) The exemption from the requirement of having GSTIN shall be as per the provisions of the Central Goods and Services Tax Act, 2017 (12 of 2017). [This paragraph(4) is an amendment dt 05.03.2021].

6. Registration process.—

   (1) The form for registration shall be as provided in the Udyam Registration portal.

   (2) There will be no fee for filing Udyam Registration.

   (3) Aadhaar number shall be required for Udyam Registration.

   (4) The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).

   (5) In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number.

   (6) In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on self-declaration basis.

   (7) No enterprise shall file more than one Udyam Registration: Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.

   (8) Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or updation process shall be liable to such penalty as specified under section 27 of the Act.

   (9) In case of any proprietorship enterprise not registered under any Act or rules of the Central Government or the State Government, the proprietor may use his or her PAN for registration of the enterprise in the Udyam Registration portal and for all other types of enterprises PAN shall be mandatory [This paragraph(9) is an amendment dt 05.03.2021].

7. Registration of existing enterprises.---

   (1) All existing enterprises registered under EM–Part-II or UAM shall register again on the Udyam Registration portal on or after the 1st day of July, 2020.

   (2) All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification.

   (3) The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31stday of March, 2021 31stday of December, 2021 [Extension of date from March to December is through Amendment dated 16.06.2021]

   (4) An enterprise registered with any other organisation under the Ministry of Micro, Small and Medium Enterprises shall register itself under Udyam Registration.

8. Updation of information and transition period in classification.--

   (1) An enterprise having Udyam Registration Number shall update its information online in the Udyam Registration portal, including the details of the ITR and the GST Return for the previous financial year and such other additional information as may be required, on selfdeclaration basis.

   (2) Failure to update the relevant information within the period specified in the online Udyam Registration portal will render the enterprise liable for suspension of its status.

   (3) Based on the information furnished or gathered from Government’s sources including ITR or GST return, the classification of the enterprise will be updated.

   (4) In case of graduation (from a lower to a higher category) or reverse-graduation (sliding down to lower category) of an enterprise, a communication will be sent to the enterprise about the change in the status.

   (5) 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 expiry of one year from the close of the year of registration.

   (6) In case of reverse-graduation of an enterprise, whether as a result of re-classification or due to actual changes in investment in plant and machinery or equipment or turnover or both, and whether the enterprise is registered under the Act or not, the enterprise will continue in its present category till the closure of the financial year and it will be given the benefit of the changed status only with effect from 1st April of the financial year following the year in which such change took place.

9. Facilitation and grievance redressal of enterprises.--

   (1) The Champions Control Rooms functioning in various institutions and offices of the Ministry of Micro, Small and Medium Enterprises including the Development Institutes (MSME-DI) shall act as Single Window Systems for facilitating the registration process and further handholding the micro, small and medium enterprises in all possible manner.

   (2) The District Industries Centres (DICs) will also act as Single Window facilitation Systems in their Districts.

   (3) Any person who is not able to file the Udyam Registration for any reason including for lack of Aadhaar number, may approach any of the above Single Window Systems for Udyam Registration purposes with his Aadhaar enrolment identity slip or copy of Aadhaar enrolment request or bank photo pass book or voter identity card or passport or driving licence and the Single Window Systems will facilitate the process including getting an Aadhaar number and thereafter in the further process of Udyam Registration.

   (4) In case of any discrepancy or complaint, the General Manager of the District Industries Centre of the concerned District shall undertake an enquiry for verification of the details of Udyam Registration submitted by the enterprise and thereafter forward the matter with necessary remarks to the Director or Commissioner or Industry Secretary concerned of the State Government who after issuing a notice to the enterprise and after giving an opportunity to present its case and based on the findings, may amend the details or recommend to the Ministry of Micro, Small or Medium Enterprises, Government of India, for cancellation of the Udyam Registration Certificate.

Registration on Udyam Registration Portal

The portal can be accessed at https://udyogaadhaar.gov.in/

• An enterprise for the purpose of this process will be known as Udyam and its Registration Process will be known as 'Udyam Registration'
• Registration Process is free, fully online, paperless and based on self-declaration.
• No documents or proof are required to be uploaded for registering an MSME.
• Only Adhaar Number will be enough for registration (To Log in to Portal).
• The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).
• In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number.
• PAN & GST linked details on investment and turnover of enterprises will be taken automatically from Government data bases.
• Having PAN & GST number is mandatory from 01.04.2021.
• A permanent registration number will be given after registration.
• After completion of the process of registration, a certificate will be issued online.
• This certificate will have a dynamic QR Code from which the web page on our Portal and details about the enterprise can be accessed.
• There will be no need for renewal of Registration.
• Single window systems at Champions Control Rooms and at DICs will help the applicants in the process.
• Those who have EM-II or UAM registration or any other registration issued by any authority under the Ministry of MSME, will have to re-register themselves.
• No enterprise shall file more than one Udyam Registration. However, any number of activities including manufacturing or service or both may be specified or added in one Registration.
• In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on self-declaration basis.
• No enterprise shall file more than one Udyam Registration: Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.
• Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or updation process shall be liable to such penalty as specified under section 27 of the Act.

Yes. Both term finance and working capital facilities are sanctioned by the Bank.

No collaterals/third-party guarantee for loans under Micro & Small Enterprises segment which are covered under CGTMSE guarantee cover. For other accounts which are not covered under CGTMSE, the Bank may stipulate collaterals as per Bank’s guidelines.

Yes

• Individuals: Self-employed professionals, single proprietors, and partnership firms
• Businesses: Private limited corporations, public limited companies, and Limited Liability Partnerships (LLPs)

Common Documents:

• Duly filled loan application form
• Proof of Identity: Aadhaar Card / Voter’s ID Card / Passport / Driving License / PAN Card / Signature identification from present bankers of proprietor, partner of director (if a company)
• Proof of residence: Aadhaar Card / Recent telephone bills, electricity bill, property tax receipt /Passport / voter’s ID Card of Proprietor, partner of Director (if a company)
• Proof of business Address
• Memorandum and Articles of Association of the Company / Partnership Deed of partnership firms, etc.
• Assets and liabilities statement of promoters and guarantors along with latest income tax returns.

Additional documents based on activity undertaken

• SSI / MSME registration / Udyog AADHAAR Memorandum, if applicable.
• Projected balance sheets for the next two years in case of working capital limits and for the period of the loan in case of term loan.
• Last three years balance sheets Firm, Company, etc
• Copies of lease deeds/ title deeds of all the properties being offered as primary and collateral securities
• Certificate of incorporation from RoC in case of company (CIN No. and DIN no. of directors)
• Bank Account details wherever applicable (with details of outstanding in case of existing loans / limits)
• GSTN No., if applicable.

There are certain documents, licensees, etc which are required based on the nature of the business entity such as manufacturing, trading, export-import, IT, service sector, etc

Scheduled Commercial Banks are members of BCSBI (Banking Code of Conduct and Standards Board of India) and thereby they commit that:
We will provide you with a checklist of the documents to be submitted (compliant with legal and regulatory requirements) along with the loan application form to enable you to submit the application complete in all respects.
If required, we will assist you in filling up your loan application form.

Scheduled Commercial Banks are members of BCSBI (Banking Code of Conduct and Standards Board of India) and thereby they commit that: We shall invariably provide you with an acknowledgement of your loan application, whether submitted online or manually, indicating therein the . time frame within which the application will be processed.

• The Banks are actively engaging themselves in the growth of Start Ups by developing dedicated loan products as well as Start Up specific Bank branches
• Some examples of loan products for Start ups from various Banks:
  ● “MSME UDAAN” from SBI
  ● “Union Start Up Scheme” from UBI

Similarly, all Banks have products catering to the needs of the Start Ups; only thing required is a viable business plan, financial statement and legal documents, etc

Stand Up India

The scheme facilitates bank loans between 10 lakh and 1 crore to atleast one women borrower per bank branch for setting up a greenfield enterprise.

Government has launched various scheme to promote MSME/Startup. Some of which are:

• Pradhan Mantri Mudra Yojana
• Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation
• Stand Up India
• SIDBI Make in India Soft Loan Fund for Micro Small and Medium Enterprises (SMILE)
• Social Innovation Programme For Products: Affordable and Relevant to Societal Health (SPARSH)

Bank may sanction collateral free loan to the tune of Rs.500 lakhs by availing credit guarantee for CGTSME under CGS-I

Through the web portal www.psbloansin59minutes.com, a borrower can get Digital Approval in just 59 minutes from anywhere at any time. Post Digital Approval, the time taken for loan disbursement depends on the information and documentation provided by the borrower on the portal and banks. The more accurate the data, the sooner the loan gets disbursed. Generally, post Digital Approval, the loan is expected to be sanction/disbursed in 7-8 working days.

• Every bank has a customer grievance redressal mechanism and in case of undue delay or arbitrary rejection of the loan, the complaint can be filed with bank’s Grievance Officer.
• If case of non-redressal, complaint can be escalated to Internal Ombudsman
• Complaint can also be lodged with RBI Ombudsman.