In view of the increase in price index and cost inputs, Reserve Bank of India revised sub-targets for lending to the micro and small enterprises sector.
According to the new norms, banks must divert 40 per cent of total advances to the sector to micro (manufacturing) enterprises having investment in plant and machinery up to Rs 10 lakh. The existing limit is Rs 5 lakh.
The revision is within the overall ceiling of Rs 25 lakh for micro enterprises as defined in the Micro, Small and Medium Enterprises Act.
In the case of micro (service) enterprises, the investment in equipment has been pegged at up to Rs 4 lakh (Rs 2 lakh).
Further, 20 per cent of the total advances to the sector should go to micro (manufacturing) enterprises with investment in plant and machinery above Rs 10 lakh (existing limit: Rs 5 lakh) and up to Rs 25 lakh; and micro (service) enterprises with investment in equipment above Rs 4 lakh (Rs 2 lakh) and up to Rs 10 lakh.
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