Retail and wholesale traders under the MSME

Retail and wholesale traders under the MSME

CONTEXT:    Retail and wholesale traders under the MSME (micro, small and medium enterprises) classification making them eligible for priority sector advances by banks and financial institutions per RBI guidelines.

CONCEPT:

The revised PSL norms are aimed at aligning the same with “emerging national priorities and bring sharper focus on inclusive development.

Retail and wholesale trade were left out of the ambit of MSME.

Under the revised guidelines, the Ministry of MSME has issued an order to include retail and wholesale trade as MSME and extending to them the benefit of priority sector lendingadding that this would benefit 2.5 crore retail and wholesale traders, and they will now be able to register on the Udyam Registration Portal.

Priority sector lending

It refers to those sectors or areas of the economy which may not get timely and adequate credit.

The RBI requires Indian banks to allocate certain portion of their overall lending for sectors mentioned under PSL. These areas of focus for PSL include Agriculture, Micro, Small and Medium Enterprises (MSME), Export Credit, Education, Housing, Social Infrastructure, Renewable Energy.

Reserve Bank of India has, from time to time, issued a number of guidelines to banks on Priority Sector Lending. These were last reviewed in April 2015 and for urban and cooperative banks in May 2018.

PSL guidelines are applicable to all domestic scheduled commercial banks (excluding Regional Rural Banks and Small Finance Banks) and foreign banks with 20 branches and above.