MSMED Act 2006 — medium enterprise definition; all MSME bank loans under priority sector
Question
Consider the following statements with reference to India: Which of the statements given above is/are correct?
- 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.
Options
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Explanation
Statement 1 is incorrect; the 2020 revision of MSME definitions significantly raised the thresholds. A medium enterprise is now defined as having investment up to ₹50 crore and turnover up to ₹250 crore. Statement 2 is broadly correct; lending to all legally classified MSMEs is an explicit, mandated component of the RBI's Priority Sector Lending (PSL) norms.
Answer: (b).
Question details
Year
2023
Paper
GS Paper 1
Question
Q71
Subject
Economy
Sub-topic
Industry, MSME & Services
Type
Statement-based
Difficulty
Medium
Nature
Static
Source hint
Micro Small & Medium Enterprises Development Act 2006
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