The Micro, Small and Medium enterprises (MSMEs) has vital role in the Indian economy.

The Ministry of Micro, Small and Medium Enterprises (MSME), a branch of the Government of India, is the apex executive body for the formulation and administration of rules, regulations and laws relating to MSMEs in India. Micro, Small and Medium Enterprises Development Act, 2006, was enacted to provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises.

Classification of enterprises:

RBI vide its latest circular dated July 2, 2020 has revised criteria for MSME classification, in line with Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The circular has introduced additional criteria of turnover in comparison to earlier criteria which was only for investment in plant and machinery or equipment.

Mechanism to address stress in account of MSME:

• RBI vide its circular dated March 17, 2016, has provided a framework along with operating instructions for revival and rehabilitation of MSMEs.
• RBI, through its various circulars on restructuring of advances, has permitted one-time restructuring of existing loans to MSMEs classified as ‘standard’ without a downgrade in the asset classification, subject to complying conditions stipulated therein.
• RBI through its recent circular dated May 5, 2021 has extended the one-time restructuring where the restructuring of the borrower account shall be invoked by September 30, 2021 and implemented within 90 days from the date of invocation subject to compliance with other conditions stipulated therein.