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?

According to the updated definition effective from July 1, 2020, a medium enterprise is defined as one where the investment in Plant and Machinery or Equipment does not exceed ₹50 crore and the turnover does not exceed ₹250 crore.

Therefore, Statement 1 is incorrect as it cites outdated investment limits under the MSMED Act, 2006.

As per the Reserve Bank of India (RBI) guidelines on Priority Sector Lending (PSL) dated September 4, 2020, all bank loans to MSMEs do not automatically qualify under the priority sector. Only those MSMEs conforming to the conditions prescribed therein qualify. These conditions relate to the MSME being engaged in the manufacture/production of goods related to industries specified in the Industries (Development and Regulation) Act, 1951 or in providing/rendering specific services.

Thus, Statement 2 is incorrect because it makes an overbroad generalization.

Neither statement 1 nor statement 2 is correct.

Sources:

• MSME Definition Revision
• RBI Priority Sector Lending Guidelines