Page 48 - Banking Finance August 2017

RBI CIRCULAR

RBI CIRCULAR

Investment in plant and machinery for 3. Further, the Ministry has clarified that for the
investment in plant and machinery for the purpose of
the purpose of classification as Micro, classification of an enterprise as Micro, Small or
Small and Medium Enterprises - Medium, the purchase value of the plant and
machinery is to be reckoned and not the book value
documents to be relied upon
(purchase value minus depreciation).
RBI/2017-18/21 4. In terms of OM F. No. 12(4)/2017 - SME dated May 31,
FIDD.MSME & NFS.BC.No.10/06.02.31/2017-18 2017, issued by the Ministry, the effective date for the
above provision would be from the date MSMED Act,
1. Please refer to our Master Direction 2006 came into force and not prospectively. Further,
FIDD.MSME&NFS.3/06.02.31/2016-17 dated July 21, the above provisions would be applicable to section 7
2016 on 'Lending to Micro, Small & Medium Enterprises (1) (a) and section 7 (1) (b) of the MSMED Act, 2006
(MSME) Sector' together with notification No. S.O. i.e. enterprises engaged in manufacturing of goods and
1722(E) dated October 5, 2006 issued by Ministry of rendering of services as well.
MSME, GoI, New Delhi. In terms of para 2 of the said
notification, while calculating the investment in plant Yours faithfully
and machinery, the original price thereof, shall be taken (Uma Shankar)
into account, irrespective of whether the plant and Chief General Manager-In- Charge
machinery are new or second hand.
2. In this regard, Ministry of MSME, GoI, vide their Office Audit Committee of the Board of
Memorandum (OM) F. No. 12(4)/2017-SME dated Directors - Nomination of Non-Executive
March 8, 2017, have clarified that for ascertaining the
investment in plant and machinery for classification of Chairman

an enterprises as Micro, Small and Medium, the RBI/2017-18/20
following documents could be relied upon:
DBS.ARS.BC.01/08.91.020/2017-18
(i) A copy of the invoice of the purchase of plant and
machinery; or
1. Please refer to Para 3 (ii) of our circular dated
(ii) Gross block for investment in plant and machinery September 26, 1995 on "Audit Committee of the Board
as shown in the audited accounts; or of Directors - Reconstitution" and Para (ii) of our circular
(iii) A certificate issued by a Chartered Accountant DOS.No.BC.3/08.91.020/96 dated January 20, 1997 on
regarding purchase price of plant and machinery. "Public Sector Banks - Audit Committee of the Board

48 | 2017 | AUGUST | BANKING FINANCE

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