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  • MSME (Micro Small and Medium Enterprises) Loan is Rated as "Great!" by 92237 Users

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    MSME (Micro Small and Medium Enterprises) Loan

    Government of India enacted the Micro, Small and Medium Enterprises Development Act, 2006 which defines Micro, Small and Medium Enterprises as follows:

    Enterprises that manufacture or produce or process or preserve goods

    • Micro enterprise: Where an enterprise investment in plant and machinery does not exceed Rs.25 lakhs.
    • Small enterprise: Where the investment in plant and machinery is more than Rs.25 lakh, but does not exceed Rs.5 crore.
    • Medium enterprise: Where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.

    Enterprises that provide service and whose investment in equipment, land or building is not directly related to the service that it renders

    • Micro enterprise: Where an enterprise investment in equipment does not exceed Rs.10 lakhs.
    • Small enterprise: Where the investment in equipment is more than Rs.10 lakh, but does not exceed Rs.2 crore.
    • Medium enterprise: Where the investment in equipment is more than Rs.2 crore but does not exceed Rs.5 crore.

    MSME (Micro Small and Medium Enterprises) Loan Scheme

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    Credit Guarantee Fund Trust for Micro and Small Enterprises was set up by Ministry of MSME, Government of India and SIDBI. The main aim was to facilitate flow of credit to MSME sector without the need for collateral or any third party guarantee. The objective of the scheme is to give importance to the project viability and secure the credit facility on the asset that is being financed.

    The Guarantee Trust will make good the loss if the borrower fails to discharge his liability. Up to 85% of the outstanding amount that is defaulted and the loss incurred by the lender will be covered by the Guarantee Trust. Credit Guarantee Fund Trust for Micro and Small Enterprises will cover for credit facilities up to Rs.1,00,00,000 that the lender has funded without any collateral or third party guarantee. To avail the guarantee cover, Credit Guarantee Fund Trust for Micro and Small Enterprises charges an annual service fee. This fee is borne by the borrower.

    The fee that is payable to the Trust is one-time guarantee fee of 1.5% and annual service fee is 0.75% on credit facilities sanctioned. For loans up to Rs.5 lakh, the one-time guarantee fee is 1% and annual service fee is 0.5%. For loans in the North-east Area, the one-time guarantee fee is set at 0.75%.

    MSME Loan Eligibility criteria

    The MSME Loan is offered to the priority sector. The priority sector impacts a large section of the population, the weaker sections and sectors that are employment intensive such as agriculture, education, housing, export credit, micro and small enterprises and others as expressed by the government.

    MSME Loan Limit and Interest rate

    Certain targets are set for banks’ lending to the Micro and Small Enterprises. The banks’ have to achieve a 20% growth in credit to micro and small enterprises and 10% annual growth in the number of micro enterprises accounts and 60% of total lending to Micro and Small Enterprises sector. The banks have to follow the following:

    • 40% of the total advances must go to micro and small enterprises involved in manufacturing having investment in plant and machinery up to Rs.10 lakh and for service enterprises having investment in equipment up to Rs.4 lakh.
    • 20% of the total advance to micro and small enterprises should go to manufacturing enterprises that have above Rs.10 lakh till Rs.25 lakh investment in the plant and machinery and for service enterprises that have investments in equipment above Rs.4 lakh up to Rs.10 lakh.
    • To simplify, 60% of the advances must go to micro enterprises.

    The banks must sanction the loan after careful appraisal of genuine working capital requirement of the borrower and considering the business cycle and short term credit requirement.

    Small Scale Industry units’ working capital requirement is minimum 20% of their estimated turnover up to Rs.5 crore.

    The rate of interest have been deregulated by the Reserve Bank of India and it is governed by the bank’s lending policy.

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    Security

    Banks are instructed not to accept collateral in the case the loan amount is up to Rs.10 lakh. If the track record of the borrower is good, the limit may be increased loans up to Rs.25 lakh.

    Other services offered to MSE Entrepreneurs

    Apart from offering loans to MSE Entrepreneurs, the banks will also provide the following:

    • Rural Self-Employment Training Institutes:
    • Here short duration skill upgradation programmes are conducted to help the existing entrepreneurs to keep up with the changing global market.

    • Financial literacy and consultancy support:
    • Through Financial Literacy Centres, banks provide assistance to MSE entrepreneurs with financial, operational skills that includes accounting, finance, business planning etc.

    Restructuring of Sick Units

    A Micro or Small Enterprise is said to be sick if the any of the borrowal account of the enterprise remains NPA for 3 months or more or if there is erosion in the net worth due to accumulated losses to the extent of 50% of its net worth.

    The symptoms of sickness are as follows:

    • Lack of healthy movement of stocks and rising level on inventory.
    • Inability of the party to promptly honour the cheques.
    • Delayed submission of stock statements.
    • Unhealthy fluctuations in CC account.
    • Default in paying the interest charged on the borrower’s account.
    • Frequent request to grant excess limit without corresponding increase in sale.
    • Capacity utilization is low.
    • Current ratio is poor.

    If the units are deemed sick, then they must be restructured with proactive approach to avoid further deterioration. Service enterprises are rehabilitated through debt restructuring mechanism. Service enterprises that need concessions are restructures and relief measures are offered.

    MSME Loan Branches

    Public sectors banks have been directed to open at least one specialized MSME branch in each district. The banks can categorise the general branch that has 60% or more advances to MSME sector as a specialized MSME branch.

    The branch must be easily accessible by the entrepreneurs and it must equip personnel having requisite expertise. Those branches must focus on rendering service to the MSME sector and it can occasionally render other services to other sectors and borrowers.

    There are 2032 specialised MSME branches as on March, 2013. List of Banks that have MSME care centres:

    1. Allahabad Bank
    2. Bank of Baroda
    3. Oriental Bank of Commerce
    4. Andhra Bank
    5. State Bank of Bikaner and Jaipur
    6. State Bank of Hyderabad
    7. Bank of India
    8. Bank of Maharashtra
    9. State Bank of Travancore
    10. Canara Bank
    11. Dena Bank
    12. Indian Bank
    13. Indian Overseas Bank
    14. Punjab and Sind Bank
    15. Punjab National Bank
    16. Syndicate Bank
    17. UCO Bank
    18. Union Bank of India
    19. United Bank of India
    20. Vijaya Bank
    21. State Bank of Mysore
    22. Corporation Bank
    23. IDBI Bank
    24. State Bank of Patiala
    25. State Bank of India
    26. Central Bank of India
    27. State Bank of Indore

    MSME Loan Application

    The MSME Loan application requires you to fill in the following details:

    • Application date.
    • Name of the enterprise.
    • Registered office address.
    • Address of the factory or shop.
    • If the enterprise belongs to SC/ ST/ OBC/ Minority community
    • Telephone number.
    • E-mail address.
    • Mobile number.
    • PAN Card number.
    • Constitution (proprietorship, partnership firm, private limited company, limited company, cooperative society).
    • Date of establishment
    • State where the business is located.
    • Branch where the business is located.
    • Name of proprietors or partners or directors along with their age, academic qualification, address, telephone number and experience.
    • Existing activity.
    • Name of associate concerns and nature of association.
    • Mention the existing credit facilities, if any.
    • List out the proposed credit facilities.
    • If it is a Term Loan requirement, then the details of the machinery must be given. It should contain the details of type of machine, purpose of the machine, whether it is imported, name of supplier, cost of the machine, contribution made by the promoter and the loan required.
    • Project cost detail that includes the land development, construction of building, purchase of plant and machinery, purchase of vehicles, purchase of other assets, contingencies, interest during holiday period and working capital margin.
    • Project means of finance, that must include owner’s contribution, unsecured loan, subsidy and term loan.
    • Details of the collateral offered if any and detail of third party guarantee, if any.
    • Statutory obligations status must be mentioned. Statutory obligations are registration under Shops and Establishment Act, registration under SSI (Provisional and final), Drug license, latest Sales Tax Return filed, latest Income Tax Return files and any other statutory dues remaining outstanding.

    Effects of 2018-19 Union Budget on the MSME Sector

    Indian Finance Minister - Mr. Arun Jaitley - introduced a number of proposals targeting the Micro, Small, and Medium Enterprise (MSME) sector during the 2018-19 Union Budget held on 1 February 2018. Being one of the major sectors for growth and employment in the country, the Government plans to improve the financing for the capital requirement of the industry. In addition to MSME, the Union Budget also focused on the agriculture, health, finance, infrastructure, social protection, education, employment, and other sectors. During the meeting, the minister also voiced his proposals regarding health and educational cess, tax, and initiatives to improve the cash economy of India.

    Highlights of the 2018-19 Union Budget on the MSME Sector

    • The Union Budget of the upcoming fiscal year aims to improve the financing for MSMEs by offering prompt loans, incorporating policies for non-performing assets, and reducing tax burden.
    • The meeting also indicated a review of refinancing policies and eligibility criteria for Non-Bank Finance Companies (NBFCs).
    • The Finance Minister also mentioned that the policies and institutional development measures for Fintech companies might also be revamped to promote their growth.
    • Apart from launching the ‘‘Start-Up India’’ program, the Government intends to encourage the Venture Capital Funds (VCF) and the angel investors by introducing policies and an exclusive taxation system directed towards alternative investment funds.
    • For the forthcoming 3 years, the Government proposes to contribute 12% of the earnings of new employees of all sectors towards Employees' Provident Fund (EPF).
    • The Employees Provident Fund and Miscellaneous Provisions Act, 1952 will be amended to reduce the employee contribution for female workers to 8% for the first 3 years of employment. However, the employers’ contribution towards the EPF will remain unchanged at 12% or 10% in this case.
    • Under the existing Pradhan Mantri Kaushal Kendra Programme, the Government aims to set up model aspirational skill centers in all the districts of the country.
    • For the upcoming fiscal year, the Finance Minister proposes to allow a corpus of Rs.7,158 crore for the textile sector.

    In addition to the above mentioned points, the Union Budget 2018-19 saw a number of modifications to improve the economy of the country.

    MSME (Micro Small and Medium Enterprises) Loan Reviews

    • HDFC Bank Personal Loan
      "They are offering a loan maximum for private company people"
      0.5 5.0/5 "Blown Away!"
      I have taken this loan for 3 years back. Now they have reduced the interest rates. They charged me around 18% as interest rate when i take the loan. Now they have reduced the interest rates upto 10%. I have opted the tenure period of 3 years. I'm going to close the loan in another 3 years. I have taken the loan amount of Rs. 1 lakhs and i top up the amount of Rs.40000. They charged me around Rs. 3000 as processing fee.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 20, 2018
    • review Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      The interest rate with them has been very good as well. There has not been any issues faced with any of the services which they had provided so far. It had been a very good experience with them and the process in getting loan has been very easy and the loan amount has been satisfactory as well.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jun 20, 2018
    • Standard Chartered Bank Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      It had been a very good experience with them and the process in getting loan has been very easy and the loan amount has been satisfactory as well. The interest rate with them has been very good as well. There has not been any issues faced with any of the services which they had provided so far.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jun 20, 2018
    • HDFC Bank Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      It had been a very good experience with them and the process in getting loan has been very easy and the loan amount has been satisfactory as well. The interest rate with them has been very good as well. There has not been any issues faced with any of the services which they had provided so far.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jun 20, 2018
    • Axis Bank Personal Loan
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      It has been very good experience with the personal loan and the loan has been satisfactory and the interest rate also had been nominal and it had been normal. The whole process in getting the loan amount had been very smooth and easy and there has not been any kind of issues faced with them so far.
      Was this review helpful? 0
      , chennai
      Reviewed on Jun 20, 2018
    • Capital First Personal Loan
      "Very Good Service"
      0.5 5.0/5 "Blown Away!"
      It has been a very good experience with this personal loan. This loan has been completed and getting the loan has been a simple and easy process. The interest rate with them had been good and the loan amount which they had provided had been satisfactory as well. The whole process has taken less time and it went smooth.
      Was this review helpful? 0
      , new delhi
      Reviewed on Jun 20, 2018
    • SBI Personal Loan
      "Better service"
      0.5 5.0/5 "Blown Away!"
      I got the personal loan from the STATE BANK OF INDIA around 2years ago. The required loan amount has been given and I am satisfied with the loan amount. The rate of interest and the charges are average with the State bank personal loan process.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jun 20, 2018
    • ICICI Bank Personal Loan
      "Good service"
      0.5 5.0/5 "Blown Away!"
      I got the personal loan from the ICICI bank around 3 years ago,. The required loan amount has been given and I am satisfied with it. They have disbursed the loan amount within 15days of time. The rate of interest and the charges are average with the ICICI bank and I am satisfied with it.
      Was this review helpful? 0
      , secunderabad
      Reviewed on Jun 20, 2018
    • HDFC Bank Personal Loan
      "Good Service"
      0.5 5.0/5 "Blown Away!"
      I took a personal from the HDFC bank for 4.5 lacs. I applied at the branch, my friend is a staff so the whole process was easy for me. I got the loan amount with in 7 working days. The whole documentation and the application was really smooth and hassle free. Overall it was a useful experience with the HDFC personal loan.
      Was this review helpful? 0
      , chennai
      Reviewed on Jun 20, 2018
    • Bajaj Finserv Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I got the personal loan from the bajaj finserv around 8months ago. They took around 3days of time to disburse the loan amount and they have disbursed the required loan amount. The customer support service and the response is good with the bajaj finserv. The rate of interest and the charges are pretty high with the bajaj finserv personal loan services.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jun 20, 2018
    • HDFC Bank Personal Loan
      "Good experience"
      0.5 4.5/5 "Excellent!"
      My personal loan was taken with HDFC bank 3 years back. The loan amount was 50,000. The interest rate was between 11-12% which is average in the market. The tnrue period was 3 years . The customer service and responses was up to the mark. They have sanctioned the loan with the committed time.The processing fee was nominal.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 20, 2018
    • Bank Bazaar Personal Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      I am using Bankbazaar.com from the last three months of time. I would like to say that the customer service is good one and the online portal is also really easy to access. I am happy with the Bankbazaar.com.
      Was this review helpful? 0
      , kakinada
      Reviewed on Jun 20, 2018
    • Fullerton Personal Loan
      "Wonderful"
      0.5 5.0/5 "Blown Away!"
      Customer service is good one with the Fullerton and the rate of interest is very nice one too. I would like to say that the rate of interest is around 30% and the loan amount got disbursed within a week of time.
      Was this review helpful? 0
      , kakinada
      Reviewed on Jun 20, 2018
    • Bank Bazaar Personal Loan
      "Excellent"
      0.5 4.0/5 "Great!"
      Bankbazaar.com is good one and am using it from the last three years of time. I would like to say that the customer service is good one and the response is good too. I am happy with the Bankbazaar.com and I dont have any issues with them till now.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 20, 2018
    • ICICI Bank Personal Loan
      "Excellent"
      0.5 4.0/5 "Great!"
      Customer service is good one with the ICICI bank and the rate of interest is not aware by end. The loan amount got disbursed within three to four days of time . Everything is better one for me with the ICICI bank.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 20, 2018
    • Bank Bazaar Personal Loan
      "Excellent"
      0.5 4.5/5 "Excellent!"
      Bankbazaar.com is working in better way and am using it from the last six months of time. I would like to say that the customer service is good too with the Bankbazaar.com, also am really happy with them till now. I dont have any issues with them till now.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jun 20, 2018
    • HDFC Bank Personal Loan
      "Wonderful"
      0.5 4.0/5 "Great!"
      Rate of interest is good one with the HDFC bank for the personal loan. I would like to say that the customer service is very good and the response is also good too. Everything is better one for me with the HDFC bank for the loan, which I have opted for.
      Was this review helpful? 0
      , mumbai
      Reviewed on Jun 20, 2018
    • Bank Bazaar Personal Loan
      "Average"
      0.5 4.0/5 "Great!"
      Bankbazaar.com is good one and am using it from the last one year of time. I would like to say that the response is also good too and the mobile application is good too. I dont have any issues with them till now.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 20, 2018
    • Standard Chartered Bank Personal Loan
      "Good "
      0.5 4.0/5 "Great!"
      Customer service is good one and the response is on time for the personal loan with the Standard chartered bank. Rate of interest is around 11%. I am happy with them as such, also I dont have any issues with them as such.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 20, 2018
    • HDFC Bank Personal Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      17.49% is the rate of interest for the personal loan with the HDFC bank and everything got happens with in three days of time. I am happy with the HDFC bank till now. I have not faced any such issues with them till now.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Jun 20, 2018
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