FIDD.MSME & NFS.BC.No.10/06.02.31/2017-18
All Scheduled Commercial Banks
(Excluding Regional Rural Banks)
Dear Sir / Madam,
Investment in plant and
machinery for the purpose of classification as Micro, Small and Medium
Enterprises – documents to be relied upon
Please refer to our Master
Direction FIDD.MSME&NFS.3/06.02.31/2016-17 dated July 21, 2016 on
‘Lending to Micro, Small & Medium Enterprises (MSME) Sector’ together
with notification No. S.O. 1722(E) dated October 5, 2006 issued
by Ministry of MSME, GoI, New Delhi. In terms of para 2 of the said notification,
while calculating the investment in plant and machinery, the original price
thereof, shall be taken into account, irrespective of whether the plant and
machinery are new or second hand.
2. In this regard, Ministry of
MSME, GoI, vide their Office Memorandum (OM) F. No. 12(4)/2017-SME dated
March 8, 2017, have clarified that for ascertaining the investment in plant
and machinery for classification of an enterprises as Micro, Small and
Medium, the following documents could be relied upon:
(i) A copy of the invoice of the
purchase of plant and machinery; or
(ii) Gross block for investment
in plant and machinery as shown in the audited accounts; or
(iii) A certificate issued by a
Chartered Accountant regarding purchase price of plant and machinery.
3. Further, the Ministry has
clarified that for the investment in plant and machinery for the purpose of
classification of an enterprise as Micro, Small or Medium, the purchase
value of the plant and machinery is to be reckoned and not the book value
(purchase value minus depreciation).
4. In terms of OM F. No.
12(4)/2017 – SME dated May 31, 2017, issued by the Ministry, the effective
date for the above provision would be from the date MSMED Act, 2006 came
into force and not prospectively. Further, the above provisions would be
applicable to section 7 (1) (a) and section 7 (1) (b) of the MSMED Act,
2006 i.e. enterprises engaged in manufacturing of goods and rendering of
services as well.
Chief General Manager-In- Charge