Consider the following statements with reference to India : 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 is/are correct?
A
1 only
B
2 only
Correct answer
C
Both 1 and 2
D
Neither 1 nor 2
Explanation
Statement 1 is wrong: under the MSMED Act, 2006 as revised in 2020, a medium enterprise has investment in plant and machinery of more than ₹10 crore and up to ₹50 crore, with turnover up to ₹250 crore (before 2020 the range for medium manufacturing units was ₹5 to 10 crore), so ₹15 to 25 crore is wrong under either definition. Statement 2 is correct: RBI's priority sector lending directions treat all bank loans to MSMEs that meet the MSMED Act criteria as priority sector lending. So 2 only.
Industrial SectorMSME Classification and Priority Sector LendingMicro, Small and Medium Enterprises Development (MSMED) Act, 2006medium enterprisesinvestment in plant and machinerypriority sector