Page 180 - DMGT303_BANKING_AND_INSURANCE

Unit 9: Priority Sector Lending

6. What is the definition of 'Small Scale Industries' (SSI)? Notes
Ans. Small scale industrial units are those engaged in the manufacture, processing or
preservation of goods and whose investment in plant and machinery (original cost) does
not exceed Rs. 1 crore. These would, inter alia, include units engaged in mining or
quarrying, servicing and repairing of machinery. In the case of ancillary units, the
investment in plant and machinery (original cost) should also not exceed Rs. 1 crore to be
classified under small-scale industry.

The investment limit of Rs.1 crore for classification as SSI has been enhanced to Rs.5 crore
in respect of certain specified items under hosiery, hand tools, drugs and pharmaceutical
and stationery items by the Government of India.
7. What is the definition of 'Tiny Enterprises' ?
Ans. The status of 'Tiny Enterprises' is given to all small scale units whose investment in plant
& machinery is up to Rs. 25 lakhs, irrespective of the location of the unit.
8. What are 'Small Scale Service & Business Enterprises' (SSSBE's)?
Ans. Industry related service and business enterprises with investment up to Rs. 10 lakhs in
fixed assets, excluding land and building will be given benefits of small scale sector. For
computation of value of fixed assets, the original price paid by the original owner will be
considered irrespective of the price paid by subsequent owners.
9. What does indirect finance in the small-scale industrial sector include?
Ans. Indirect finance to SSI includes the following important items:
(i) Financing of agencies involved in assisting the decentralised sector in the supply of
inputs and marketing of outputs of artisans, village and cottage industries.
(ii) Finance extended to Government sponsored corporation/organisations providing
funds to the weaker sections in the priority sector.
(iii) Advances to handloom cooperatives.
(iv) Term finance/loans in the form of lines of credit made available to State Industrial
Development Corporation/State Financial Corporations for financing SSIs.
(v) Credit provided by commercial banks to KVIC under the scheme for provision of
credit to KVIC by consortium of banks for lending to viable khadi and Village
Industrial Units.
(vi) Funds provided by banks to SIDBI/SFCs by way of rediscounting of bills of SSIs
which are originally discounted by a commercial bank and rediscounted by SIDBI/
SFCs.
(vii) Subscription to bonds floated by SIDBI, SFCs, SIDCS and NSIC exclusively for
financing SSI units.
(viii) Subscription to bonds issued by NABARD with the objective of financing exclusively
non-farm sector.
(ix) Financing of NBFCs or other intermediaries for on-lending to the tiny sector. More
so, all new loans granted by banks to NBFCs and other intermediaries for on-
lending to SSI sector w.e.f. November 11, 2003.
(x) Deposits placed with SIDBI by Foreign Banks in fulfilment of shortfall in attaining
priority sector targets.

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