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Micro, Small and Medium Enterprises

Q.3. What are the guidelines issued by RBI for lending to the MSME sector?

In terms of the Master Directions - Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025 dated March 24, 2025, all bank loans to MSMEs shall qualify for classification under priority sector lending (PSL). The definition of MSMEs shall be as given in the Master Direction - Lending to MSME Sector FIDD.MSME & NFS.12/06.02.31/2017-18 dated July 24, 2017 as updated from time to time. For PSL classification purposes, banks shall be guided by the classification recorded in the Udyam Registration Certificate (URC)/ Udyam Assist Certificate (UAC).

Further, RBI has, from time to time, issued a number of instructions / guidelines to banks relating to lending to the MSME Sector. The Master Direction FIDD.MSME & NFS.12/06.02.31/2017-18 dated July 24, 2017 incorporates the updated instructions / guidelines on the subject. The instructions issued by RBI, to banks, on various matters are available on our website www.rbi.org.in.

Q3. What is the genesis of Inter-operable Regulatory Sandbox (IoRS) initiative?

An Inter-Regulatory Technical Group on FinTech (IRTG on FinTech) was constituted under the aegis of the Financial Stability and Development Council-Sub Committee (FSDC-SC). The terms of reference (ToR) of IRTG on FinTech included discussion on issues relating to hybrid product/ service falling under the regulatory ambit of more than one financial sector regulator for admission in Regulatory Sandbox and framing of Standard Operating Procedure (SOP) for IoRS for hybrid products/services. The group, in addition to the members from Financial Sector Regulators/ Authority (RBI, SEBI, IRDAI, IFSCA and PFRDA), has representation from Department of Economic Affairs (DEA), Ministry of Finance and Ministry of Electronics and Information Technology (MeITY), GoI. In order to facilitate testing of innovative products/services falling within the regulatory ambit of more than one financial sector regulator, a Standard Operating Procedure (SOP) for IoRS has been prepared by the Inter-Regulatory Technical Group on FinTech (IRTG on FinTech). The SOP can be accessed from the link: - FinTech

Q.3 In terms of paragraph 4 of the circular, REs have been advised to intimate the different options available to address the increase in EMI in a rising interest rate scenario. What are the different options available to borrowers during a rising interest rate cycle in respect of equated installment based personal loans?

Ans: Whenever there is a reset of interest rates for an entire class of borrowers in a particular loan category, say home loan, due to increase in the reference benchmark; the RE shall provide the following options to the borrowers:

Either enhancement in EMI or elongation of number of EMIs, keeping the EMI unchanged or a combination of both options;
Switch to fixed interest rate for the remaining portion of the loan, ¹[where such an option is provided by the RE]; and
To prepay, either in part or in full, at any point during the residual tenor of the loan.

Q.4. Whether retail and wholesale trade can be classified under MSME?

The Ministry of Micro, Small and Medium Enterprises vide Office Memorandum No. 5/2(2)/2021-E/P & G/Policy dated July 02, 2021 decided to include Retail and Wholesale trade as MSMEs for the limited purpose of Priority Sector Lending and they would be allowed to be registered on Udyam Registration Portal. Detailed guidelines are available in our circular FIDD.MSME & NFS.BC.No.13/06.02.31/2021-22 dated July 07, 2021.

4. ‘मूलभूत बचत बँक ठेव खाते’ धारक त्या बँकेमध्ये अन्य कोणतेही बचत खाते ठेवू शकतो/ शकते का ? +

‘मूलभूत बचत बँक ठेव खाते’ धारक त्या बँकेमध्ये अन्य कोणतेही बचत खाते ठेवू शकतो/ शकते का ?

4. The Resolution Framework states that the accounts that do not fulfill the eligibility conditions may continue to be considered under the prudential framework applicable to the specific category of institutions. Does it mean that alternative resolution frameworks available to a specific category of financial institutions such as Paragraph 2(1)(zc)(ii) of the Master Circular – The Housing Finance companies (NHB) Directions, 2010 for housing finance companies, and Paragraph 2.2.7.21 of the Master Circular- Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs dated July 1, 2015 for Urban Co-operative Banks would continue to be applicable for non-Covid impacted borrowers?

For the borrowers eligible for resolution under the circular dated August 6, 2020 on Resolution Framework for COVID-19-related Stress, the circular dated August 6, 2020 will be applicable if a resolution process under the circular is invoked. For all other borrowers, the extant instructions as otherwise applicable shall still be in force. However, if any entity is otherwise eligible to be resolved under the Resolution Framework, only Resolution Framework can be used for resolving the stress arising out of the pandemic.

4. पीपीआय धारक कोण असतो? +

उत्तर. पीपीआय जारीकर्ता यांचेकडून पीपीआय मिळविणारी/ खरेदी करणारी आणि आर्थिक सेवा, पैसे देण्याची सुविधा, वगैरे सह वस्तू व सेवांची खरेदी त्याचा उपयोग करणारी व्यक्ती/ संस्था ही धारक असते. परंतु गिफ्ट पीपीआयच्या बाबतीत नियोजित लाभधारक (खरेदीदार नसला तरीसुद्धा) हा धारक असू शकतो.

4. नॅशनल इलेक्ट्रॉनिक फंडस ट्रान्सफर (एनईएफटी) पेक्षा आरटीजीएसची प्रक्रिया वेगळी कशी आहे?

उत्तर. एनईएफटी इलेक्ट्रॉनिक निधी हस्तांतरण यंत्रणा आहे ज्यात एका ठराविक वेळे पर्यंत मिळालेल्या व्यवहारांची टप्प्याटप्प्याने प्रक्रिया केली जाते. त्या उलट आरटीजीएसमध्ये व्यवहारांची, आरटीजीएसच्या संपूर्ण व्यवसायाच्या कामकाजाच्या वेळेत एकामागोमाग एक व्यवहार अशा पद्धतीने प्रक्रिया केली जाते.

4. Who receives the application ? +

The Department / Office selected by the applicant, while submitting his/her application through ATS, will receive the application.

Q 4. What would happen with the existing companies registered with RBI as NBFCs and conducting factoring business that constitute less than 75 percent of total assets / income ? +

Ans. Such a company shall have to submit to RBI, a letter of its intention either to become a Factor or to unwind the business totally, and a road map to this effect. The company would be granted CoR as NBFC-Factor only after it complies with the twin criteria of financial assets and income. If the company does not comply within the period as specified by the Bank, it would have to unwind the factoring business.