RPCD.PLNFS.BC.93/PS.72-91/92

February 26, 1992
Phalguna 7, 1913

All Scheduled Commercial Banks
(excluding Regional Rural Banks)

Dear Sir,

Revision in the definition of Small Scale Industries

         Please refer to our circular RPCD.No.PLNFS.BC.20/PS.72-85/86 dated 8 October 1985 on the above subject. As you are aware, Government of India, vide their notification No.S.O.232(E) dated 2 April, 1991, published in Part-II Section 3-Sub-section (2) of the Gazette of India, Extraordinary, dated 2 April 1991 (copy enclosed), have revised the requirements to be complied with by an industrial undertaking for being regarded as small scale industrial undertaking and ancillary industrial undertaking, by enhancing the limit for investments in plant and machinery. In this connection we advise that till further instructions are issued in the matter, SSI classification under priority sector should be given only in respect of those units whose investment in plant and machinery does not exceed Rs.35 lakhs (Rs.45 lakhs in the case of ancillary undertaking). However, there is no objection to the banks financing units investments in plant and machinery exceeding the aforesaid limits. Such lendings, however, will be outside the purview of priority sector. Further, if SIDBI refinance is available in respect of loans to such industrial undertakings, banks can avail of the same.

  1. We also advise that in respect of rehabilitation of SSI units, banks may follow the revised definition as given by Government of India, viz. the investment in plant and machinery should not exceed Rs.60 lakhs in the case of SSI units and Rs.75 lakhs for ancillary undertakings, and the export oriented units, provided the export oriented units undertake to export atleast 30 per cent of the annual production by the end of third year from the date of their commencing production.

  2. Please acknowledge receipt.

Yours faithfully,

Sd/-
(S. JOHN)
Joint Chief Officer

 

 

MINISTRY OF INDUSTRY
(Department of Industrial Development)

NOTIFICATION
New Delhi

2nd April, 1991

    S.O.232(E) - Whereas the Central Government considers it necessary with a view to ascertain which ancillary and small scale industrial undertakings need supportive measures, exemption of other favourable treatment under the Industries (Development and Regulation) Act, 1951 (65 of 1951) (hereinafter referred to as the said Act) to enable them to maintain their viability and strength so as to be effective in -

    1. promoting in a harmonious manner the industrial economy of the country and easing the problem of unemployment, and

    2. securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good.

      And whereas the draft notification was laid before each House of Parliament for a period of 30 days as required under sub-section (3) of section 11B of the said Act.

      And whereas no modification in the proposed notification has been suggested by both Houses of Parliament.

      Now, therefore, in exercise of the powers conferred by sub-section (1) of Section 11B and sub-section (1) of Section 29B of the said Act, and notwithstanding anything contained in any earlier notification issued by this Department the Central Government hereby specifies having regard to the factors mentioned in sub-section (2) of the said Section 11B, the requirements mentioned in the Table below, which shall be complied with by the industrial undertakings to enable them to be regarded, as an ancillary, or a small scale industrial undertaking for the purpose of the said Act.

    TABLE

    1. Requirements to be complied with by an industrial undertaking for being regarded as small scale industrial undertaking:-

      1. An industrial undertaking in which the investment in fixed assets in plant and machinery whether held on ownership terms or on lease or by hire purchase does not exceed rupees sixty laksh.

      2. In case of an industrial undertaking referred to in (a) above the limit of investment in fixed assets in plant and machinery shall be rupees seventy five lakhs provided the unit undertakes to export atleast 30 per cent of the annual production by the end of 3rd year from the date of its commencing production.

    2. Requirements to be complied with by an industrial undertaking for being regarded as an ancillary industrial undertaking :-

      An industrial undertaking which is engaged or is proposed to be engaged in the manufacture or production of parts, components, sub-assemblies, tooling or intermediates, or the rendering of services, and the undertaking supplies or renders or proposes to supply of tender not more than 50 percent of its production or services, as the case may be, to one or more other industrial undertakings and whose investment in fixed assets in plant and machinery whether held on ownership terms or on lease or on hire purchase, does not exceed rupees seventy five lakhs.

    Note :        No small scale or ancillary industrial undertaking referred to above shall be subsidiary of or
                    owned or controlled by any other industrial undertaking.

  1. Every industrial undertaking which has been issued a certificate of registration by the Department of Industrial Development of Director General of Technical Development under the said Act and now falls within the above definition of ancillary of small scale industrial undertaking may be registered, at the discretion of the owner, as such, within six months from the date of issue of this notification.

  2. This Notification shall come into force on the date of its publication in the Official Gazette.


 

 

RPCD.No.PLNFS.BC.94/PS.72-91/92

February 28, 1992
Phalguna 9, 1913

All Scheduled Commercial Banks

Dear Sir,

Tiny Enterprises

    Please refer to our circulars DBOD.No.BP.BC.169/C.464(A)-78 and BP.BC.22/C.464(A)-81 dated 12 December 1978 and 14 February 1981 respectively regarding tiny units. Govt. of India (in their policy measures for promoting and strengthening small, tiny and village enterprises laid on the Table of both the Houses of Parliament on 6 August 1991), have since decided to increase the investment limits in plant and machinery of Tiny Enterprises from the present Rs.2 lakhs to Rs.5 lakhs, irrespective of location of the unit.

  1. Accordingly the status of "Tiny Enterprise" may be given to all small scale units, whose investment in plant and machinery is upto Rs.5 lakhs, irrespective of the population limit. A copy of circular letter No.2(3)/91-SSI. Bd. Dated 16 August 1991 issued in this connection by the office of the Development Commissioner (SSI), Ministry of Industry (Deptt. of Small Scale Industries and Agro Rural Industries), Govt. of India, New Delhi is enclosed for your information.

  2. We shall be glad if you will please issue suitable instructions to your branches/controlling officers.

Yours faithfully,

Sd/-
(S. JOHN)
Joint Chief Officer

 

 

No.2(3)/91-SSI-Bd.
Government of India,
Ministry of Industry
(Department of Small Scale Industries and ARI)
Office of the Development Commissioner (SSI)
7th Floor, Nirman Bhavan, New Delhi

16th Aug. 91

Secretary Industries,
Commissioner/Director of Industries,
All states and Union Territories

TINY ENTERPRISES & INDUSTRY RELATED
SERVICES/BUSINESS ENTERPRISES - INVESTMENT LIMIT ETC.

Dear Sir,

Tiny Enterprises

     Kindly refer to para 2.1 of the Policy Measures for promoting and strengthening small, Tiny and Village Enterprises, laid on the Table of both the Houses of the Parliament on 6th August, 1991 which reads as under:

     "Government have already announced increase in the investment limits in plant and machinery of small scale industries, ancillary units and export-oriented units to Rs.60 lakhs, 75 lakhs and 75 lakhs respectively. Such limits in respect of "TINY ENTERPRISES" would now be increased from the present Rs.2 lakhs to Rs.5 lakhs, irrespective of location of the unit."

You are requested to accord status of Tiny Enterprise to all small scale units whose investment in plant and machinery is upto Rs.5 lakhs irrespective of the population limit. In order words there is no restriction in registering Tiny Enterprises having investment in plant and machinery upto Rs.5 lakhs in any part of the country. Since all tiny units are also small scale units, registration No. to units with investment upto Rs.5 lakhs will be given in the same way as is done in the case of small scale industries. The units in which investment is less than Rs.5 lakhs in plant and machinery, the Registering Authority will make an endorsement on the certificate to the following effect:

     "The units is a tiny enterprise and its status as "Tiny" is valid upto ________ (date)

seal with signature of
(Registering Authority)

     The endorsement will be under the seal and signature of the Registering Authority and will be valid upto 5 years. If, after 5 years the unit continues to be a tiny unit, its status after verification, can be revalidated as Tiny for another 5 years and so on. Those who do not turn up for revalidation within 3 months (prior) or the validity period, will cease to be tiny enterprise after expiry of original validation period. DIC’s should maintain a record of number of units which have been accorded the status of Tiny Units, alongwith their validity period.

 

 

INDUSTRY RELATED SERVICE
AND BUSINESS ENTERPRISES

     Government have decided that Industry related service/Business Enterprises with investment upto Rs.5 lakhs in fixed assets, excluding land and building, will be eligible for the same benefits which are available to the tiny units and these can be registered as Small Scale Service/Business Enterprises (SSSBE) by the DICs. The units can be set up in any village/town irrespective of its population. This office has vide Ministry’s letter No.SSI(I)-12(14)/82 dated 18.5.82 had clarified on the types of activities to be covered in the category of Small Scale Service Establishments/Enterprises with investment upto Rs.2 lakhs etc. It has now been decided to issue a revised illustrated list of activities covered under "Small Scale Service/Business Enterprises". The list will follow, alongwith detailed instructions. Registration of SSSBE’s may await the receipt of such instructions.

Yours faithfully,

Sd/-
(SUBODH KUMAR)
Director (SSI Bd.)


 

 

RPCD.No.PLNFS.BC.95/PS.72-91/92

February 28, 1992
Phalguna 9, 1913

All Scheduled Commercial Banks

Dear Sir,

Small Tiny and Industry related
Service/Business Enterprises-SSSBEs.

         Please refer to our circular RPCD.No.PS.BC.1/C.464(A)-82 dated 1 September 1982 advising that advances to Small Scale Service Establishments (SSSE) having investment in plant and machinery in each case not exceeding Rs.2 lakhs and which are located in rural areas and towns with a population of one lakh or less, would be entitled to the same concessions and incentives as small scale industries and ancillary industries, as per the definition contained in our circular DBOD.No.BP.BC.22/C.464(A)-81 dated 14 February 1981.

  1. As a follow-up action to policy measures of promoting and strengthening small, Tiny and village Enterprises, the Government of India have recently decided to extend the benefits of the small-scale sector to all Industry related Service and Business enterprises with investment upto Rs.5 lakhs in fixed assets, excluding land and building. The units can be set up in any village/town irrespective of its population. For computation of fixed assets the original price paid by the original owner will be considered irrespective of price paid by the subsequent owner. Further, form now onwards only industry related Small Scale Service/Business Enterprises (SSSBEs) having investment in fixed assets excluding land and building upto Rs.5 lakhs will be eligible for benefits/concessions available to industries in small-scale sector. Government have, however, advised that units which have been registered as SSI of SSSE Prior to issue of the Government instruction as above shall continue to get assistance as per the existing registration and these cases need not be re-opened for deregistration.

  2. A copy each of circular No.2(3)/91-SSI-Bd. Dated 30 September 1991 and certain modification vide circular dated 3 January 1992 issued in this connection by the office of the Development Commissiner (SSI), Ministry of Industry (Department of Small Scale Industries and Agro Rural Industries), Government of India, Government of India, New Delhi is enclosed for your information.

  3. We shall be glad if you will please issue suitable instructions to your branches/controlling officers.

Yours faithfully,

Sd/-
(S. JOHN)
Joint Chief Officer

 

 

No.2(3)/91-SSI-Bd.
Government of India
Ministry of Industry
(Department of Small Scale Industries &
Agro Rural Industries)

OFFICE OF THE DEVELOPMENT COMMISSIONER (SSI)
7th Floor, Nirman Bhavan, New Delhi

30th September, 1991

Secretary Industries
All States and Union Territories
Commissioner/Director of Industries

SMALL, TINY AND INDUSTRY RELATED
SERVICE/BUSINESS ENTERPRISES

Sir,

         Kindly refer to last para of this office letter of even No.dated 16th August 1991 in which it was stated that registration of SSSBE’s may await receipt of instructions and that an illustrative list of SSSBE will follow.

  1. Prior to the issue of this letter, guidelines were issued by the Department of Industrial Development vide their letter No.SSI(I)-12 (14)/82 dated 18th May 1982 to register all service oriented enterprises as small scale service Establishment (SSSE) in which some minimum investment in fixed assets in plant and machinery upto Rs.2 lakhs was involved and the same were located in rural areas and towns with a population upto 5 lakhs.

  2. At different points of time, certain clarifications were issued by this office whether an activity was registered as SSI, SSSE or none of these. The entire list needs to be reviewed as some of these items/activities do not really qualify as industrial activities to be covered under SIDO, while some others are also not manufacturing activities but only service activities. In the latter category, not all service activities will qualify as industry related service activities. As per the new policy on small eligible scale industries, not all small service establishments will henceforth be for benefits/concessions available to units in Small Scale Sector. Only such of those small enterprises whether service or business which are industry related (now named as SSSBE’s) will be eligible for benefits/concessions admissible to Small Scale Sector. It has, therefore, been decided to re-classify various activities into Small Scale Industry (SSI) and Small Scale (Industry related) Service Business Enterprise (SSSBE).

  3. SMALL SCALE INDUSTRY

    1. It will cover the manufacturing activities of one or more item(s) included in

      1. Schedule I of Industries (Development & Regulation) Act, 1951 (65 of 1951).

      2. The list of items exclusively reserved for manufacture in the Small Scale Sector.

      3. Any manufacturing activity which is not covered above in (a) or (b).

      EXCEPT

      The activities which fall within the purview of any Statutory Board or Committee or Special Agency viz. KVIC, Silk Board, Handicrafts Board, Textile Commissioner, Handloom Board, Coir Board etc.

    2. The following activities had been recognised as SSI, falling within the purview of MSME-DO, through clarifications issued by this office from time to time.

      1. Biochemical/Biological testing laboratories.

      2. Hatcheries.

      3. Tissue culture.

      4. Beedi making/Tobacco processing.

      5. Colour Film processing studios.

      6. Laboratories engaged in testing of raw materials and finished products.

      7. Software servicing and data processing.

      8. Documentary film production units.

      9. Servicing industry undertakings engaged in maintenance, repair, testing or servicing of all types of vehicles and machinery of any description including electronic / electrical equipment / instruments i.e., measuring/control instruments, televisions, tape recorders, VCR’s, radios, transformers, motors etc.

      10. Printing press.

      It has now been decided that none of the activities above will be recognised as SSI. The activities (vi) to (x) will however be registrable as SSSBE’s (See para VI below). The remaining activities i.e. (i) to (v) above will not be recognised even as SSSBE’s.

  4. TINY ENTERPRISES

    Guidelines issued vide above referred letter dated 16.8.1991 are self-explanatory and the same be followed.

  5. SMALL SCALE SERVICE & BUSINESS (INDUSTRY RELATED) ENTERPRISES (SSSBE’s)

    The following guidelines shall be followed for the registration of SSSBE’s.

    1. As a follow up, action to Policy Measures for promoting and strengthening small, Tiny and village Enterprises, announced on 6th August, 1991 Government have decided to give benefits of small scale sector to all Industry related service and Business Enterprises with investment upto Rs.5 lakhs in fixed assets, excluding land and building. 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.

    2. Instructions issued vide Ministry’s circular letter no. SSI(I)-12(14)/82 dated 18 May 1982 giving benefits to all small scale service Establishments (SSSEs) having fixed investment in plant and machinery upto Rs.2 lakhs etc., STAND SUPERCEDED. Now onwards, only industry related small scale service/Business Enterprises (SSSBE’s) upto Rs.5 lakhs, as in (1) above will be eligible for benefits and concessions available to industries in small scale sector.

    3. An illustrative list of SSSBE’s and the illustrative list of activities that will not qualify as SSSBE (i.e. small scale service and Business (Industry related) Enterprises) is given at Annexure I and Annexure II respectively.

    4. Activities like hatchery, poultry farm, hair cutting salloons, beauty parlous etc. which were earlier declared as SSSE activity will no longer be registrable as SSI or SSSBE.

    5. The activities like Hotels (including unstarred hotels, tea cafeteria and restaurants), small service medical establishment, small rural medical service establishment, broiler scheme, decorator (both pandal and lighting), aturopathic institutions, nature cure hospitals, dental clinics, slate quarries (mining process), Piggery, fishery, cattle rearig, rabbit farming butchery, meat selling, slimming centres, dairy (if only selling milk), hot mix plant were referred to this office in the past to ascertain whether these qualify to be registered as SSSE’s? It is now clarified that none of these activities is registrable as SSSBE as the same are not recognised as industry ralated service business activities.

  6. The units which have been registered as SSI or SSSE prior to issue of these instructions, as per instructions prevailing then and which are not so registrable now, shall continue to get assistance as per existing registration. These cases need not be re-opened for deregistration. Existing units, registered as SSSE will get benefits of small scale until their investment exceeds Rs.5 lakhs.

Yours faithfully,

Sd/-
(SUBODH KUMAR)
Director (SSI Bd.)

 

 

ANNEXURE I

ILLUSTRATIVE LIST OF SMALL SCALE SERVICE BUSINESS
(INDUSTRY RELATED)

  1. Advertising Agencies

  2. Computer graphics & Data processing

  3. Marketing Consultancy

  4. Industrial Consultancy

  5. Equipment Rental & Leasing

  6. Typing Centres

  7. Zeroxing

  8. Industrial Photography

  9. Industrial R & D Labs

  10. Industrial Testing Labs

  11. Computerised design and drafting

  12. Creation of data bases suitable for foreign/Indian markets

  13. Software development

  14. Auto repair, services and garages

  15. Documentary films on themes like, family planning, social forestry, energy conservation & commercial advertising

  16. Laboratories engaged in Testing of Raw Materials Finished Products

  17. "Servicing Industry" Undertakings engaged in maintenance, repair, testing or servicing of all types of vehicles & machinery of any description including Electronic/Electrical equipment/instruments i.e. measuring/control instruments, televisions, tape recorders, VCRs, radios, transformers, motors, watches etc.

  18. Printing Press

  19. Laundry & Dry-cleaning

  20. X-Ray Clinic

  21. Tailoring

  22. Servicing of Agricultural farm equipment e.g. Tractor, pump, Rig, Boring Machine etc.

  23. Weigh Bridge

  24. Photographic Labs

  25. Blue printing and enlargement of drawing/designs facilities

  26. ISD/STD Booths for industries

  27. Teleprinter/FAX services.

 

 

No. 2(3)/91-SSI Board
Government of India
Ministry of Industry
(Department of Small Scale Industries & Agro Rural Ind.)

OFFICE OF THE DEVELOPMENT COMMISSIONER (SSI)
7th Floor, Nirman Bhawan, New Delhi

3rd January, 1992

Secretary Industries
All States and Union Territories
Commissioner/Director of Industries

Small, Tiny & Industry Related Service/Business Enterprises

References:

  1. No.2(3)/91-SSI Board dated 16.8.1991

  2. No.2(3)/91-SSI Board dated 30.9.1991

Sir,

     In continuation to this office letters of even number referred to above, this is to inform you that it has been decided to recognise the following activities as Small Scale (Industry Related) Service/Business Enterprises i.e. SSSBE:-

  1. Sub-contracting Exchanges (SEXs) established by Non-Government Industry Associations and

  2. EDP Institute established by Voluntary Associations/Non-Government Organisations.

     These will be eligible to get the registration with Directorate of Industries in the category of SSSBE and will be entitled to avail benefits available to small scale industries until their investment in fixed assets, excluding land and building, exceed Rs.5 lakhs.

     Likewise it was declared vide letter dated 30.9.1991 referred to above that Software Servicing & Data Processing and Printing presses can be registered as SSSBE’s. These items have been referred to in Para IV (2) (vii) and (x) respectively of the said letter,

     This issue has been reviewed/reconsidered and it has been decided to recognise the said activities viz. Software Servicing & Data Processing (including computer graphics) and Printing press as industrial activity registerable as Small Scale Industry (SSI) and this office letter dated 30.9.1991 referred to above stands amended accordingly.

Yours faithfully,

Sd/-
(SUBODH KUMAR)
Director (SSI Bd.)

 

 

ANNEXURE II

ILLUSTRATIVE LIST OF ACTIVITIES WHICH ARE NOT RECOGNISED AS
SMALL SCALE INDUSTRY/BUSINESS
(INDUSTRY RELATED) ENTERPRISES i.e. SSSBE’s

  1. Transportation

  2. Storage (except cold storage which is recognised)

  3. Retail/wholesale trade establishments

  4. General Merchandise

  5. Sale outlets for industrial components

  6. Health services including pathological laboratories

  7. Legal services

  8. Educational services

  9. Social Services

  10. Hotels.


 

 

RPCD.No.PLNFS.BC.126/PS.72-91/92

May 6, 1992
Vaisakha 16, 1914

All Scheduled Commercial Banks

Dear Sir,

Composite Loan to Artisans,
Village and Cottage Industries - Revised Definition

         As you are aware, our guidelines regarding advances to priority sector, vide circular RPCD.No.BC.29/PS.22-84 dated 16 March 1984, stipulate that in respect of composite loan upto Rs.25,000/- to artisans, village and cottage industries, no margin is to be maintained, and security by way of pledge/hypothecation/mortgage of assets created out of the loan will only be taken, and no collateral security/third party guarantee should be insisted. In this context, keeping in view the various factors such as general increase in the cost of production, ceilling fixed by SIDBI/NABARD on corresponding refinance scheme and persistent demand from the financing banks, we advise that we have no objection to your granting composite loans upto Rs.50,000/- to artisans, village and cottage industries. However, the margin and security norms for such advances will be asunder:-


    Amount of Credit limit

    Margin

    Security norms


    Composite
    Loan upto Rs.25,000/-

    Nil

    Pledge/hypothecation/mortgage of assets created out of the loan.Collateral security/third Party guarantee should not be taken.

     

    Composite loans over
    Rs.25,000/- and upto
    Rs.50,000/-

    15 to 25
    percent

    As determined by the banks on the merits of each case.





  1. We also advise that in paragraph 2.9 of our circular RPCD.No.BC.29/PS.22-84 dated 16 March 1984, the words "where individual credit requirements do not exceed Rs.25,000/-" may be substituted by the words "where individual credit requirements do not exceed Rs.50,000/-". Thus, artisans, village and cottage industries will be defined as: "Artisans (irrespective of location) or small industrial activities (viz. manufacturing, processing, preservation and servicing) in villages and small towns with a population not exceeding 50,000, involving utilisation of locally available natural resources and/or human skills (where industrial credit requirements do not exceed Rs.50,000/-)"

  2. Please acknowledge receipt.

Yours faithfully,

Sd/-
(S.JOHN)
Joint Chief Officer


 

 

RPCD.No.PLNFS.BC.1/SIU.20/92-93

July 1, 1992
Asadha 10, 1914

All Scheduled Commercial Banks

Dear Sir,

Rehabilitation of Sick Small Scale Industrial Units-

Parameters on interest rates and promoter’s contribution

         Please refer to our circular RPCD.No.PLNFS.BC.48/SIU-20/87 dated 6 February 1987 prescribing separate parameters in regard to the rehabilitation of sick units in the SSI sector.

  1. In the context of changes in the structure of lending rates of banks, it is considered necessary to revise the parameters on interest rates for various facilities under rehabilitation packages. It is also considered preferable to prescribe rates which will be fixed percentage points below the prevailing fixed/minimum lending rates, wherever applicable, for banks so as to obviate the need for change in the parameters, whenever there is a revision in lending rates on advances. Accordingly, it has been decided to revise the parameters on interest rates and promoters’ contribution in respect of sick SSI units under rehabilitation packages as under:

    1. Working Capital

      Interest on working capital may be charged at a rate 1.5 per cent below the prevailing fixed/minimum lending rate, wherever applicable.

    2. Funded Interest Term Loan (FITL)

      No interest may be charged on funded interest.

    3. Working Capital Term Loan (WCTL)

      Interest on working capital term loan may be charged at a rate between 1.5 per cent and 3 per cent below the prevailing fixed/minimum lending rate wherever applicable.

    4. Existing Term Loan

      Interest on existing term loan may be reduced where considered necessary by not more than 3 per cent in the case of tiny/decentralised sector units and by not more than 2 per cent in other cases, below the document rate.

    5. Contingency Loan Assistance

      Interest on the contingency loan assistance may be charged at the concessional rate allowed for working capital assistance.

    6. Fresh Rehabilitation term Loan (RTL) - (Funds for start-up expenses)

      Interest on fresh rehabilitation term loan may be charged at a rate 1.5 per cent below the prevailing fixed/minimum lending rate wherever applicable or as prescribed by SIDBI/NABARD, where refinance assistance is obtained from it for the purpose.

  2. All interest rate concessions would be subject to annual review, depending on the performance of the units.

  3. The revised parameters on interest rates will be applicable only to the packages which are yet to be prepared. In all other cases, such as where the packages sanctioned are under implementation, packages sanctioned but yet to be implemented and the draft packages finalised for final approval, the interest rates as committed in the packages may continue, subject to annual review.

  4. Promoter’s Contribution

     Promoters’ contribution towards the rehabilitation assistance may be fixed at a minimum of 10 per cent of the additional long term requirements under the package in the case of tiny sector units and at 20 per cent of such requirements for other units. In the case of units in the decentralised sector, promoters’ contribution may not be insisted upon, as hitherto, for rehabilitation. It is, however, open to banks and financial institutions to stipulate a higher promoters’ contribution where warranted. At least 50 per cent of the above promoters’ contribution should be brought in immediately and the balance within six months. For arriving at promoters’ contribution, the monetary value of the sacrifices from banks, financial institutions and Government may be taken into account, in addition to the long term requirement of funds under the rehabilitation package. While evolving packages, it should be made a precondition that the promoters should bring in their contribution within the stipulated time frame.

  5. Please acknowledge receipt.

Yours faithfully,

Sd/-
(R.K. JALAN)
Chief Officer


 

 

RPCD.No.PLNFS.BC.7/PS.72-92/93

July 15, 1992
Ashadha 24, 1914

All Scheduled Commercial Banks
(excluding Regional Rural Banks)

Dear Sir,

Revision in the definition of
Small Scale Industries

         Please refer to paragraph 1 of our circular RPCD.No.PLNFS.BC.93/PS.72-91/92 dated 26 February 1992 on the above subject. It is mentioned therein that, if SIDBI refinance is available in respect of loans to industrial undertakings, where investment in plant and machinery exceeds the SSI Classification under priority sector, but satisfies the SSI classification by Government of India, banks can avail of the same. As refinance is available from NABARD also in respect of loans to such industrial undertakings, banks can avail of the same. Hence the last sentence of paragraph 1 of our circular dated 26 February 1992, referred to above, may be substituted by the following :

         "Further, if SIDBI/NABARD refinance is available in respect of loans to such industrial undertakings, banks can avail of the same."

  1. Please acknowledge receipt.

Yours faithfully,

Sd/-
(S. John)
Joint Chief Officer


 

 

RPCD.No.PLNFS.BC.44/06.03.01/92-93

December 3, 1992
Agrahayana 12, 1914

All Scheduled Commercial Banks

Dear Sir,

Promulgation of ordinance on interest on delayed payment to
Small Scale and Ancillary Industrial undertaking

         We advise that an ordinance (No.15 of 1992) titled "The Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertakings Ordinance, 1992" has been promulgated and published in the Gazette of India, Extraordinary, Part II, Section 1 on 23 September 1992. We enclose a copy of the same for your information. The ordinance was promulgated in order to provide for and regulate the payment of interest on delayed payments to small scale and ancillary industrial undertakings and for matters connected therewith or incidental thereto.

  1. We shall be glad if your concerned branches/offices are advised to bring it to the notice of the SSI and ancillary units financed by your bank.

Yours faithfully,

Sd/-
(S. John)
Joint Chief Officer

 

 

 

No.2(1).89-90-SSI-BD.
Ministry of Industry
Office of the Development Commissioner
(Small Scale Industries)
Nirman Bhavan, New Delhi-110 011

October 5, 1992

  1. Secretaries,
    Government of India.

  2. Secretary (Industries),
    All States/UTs.

  3. Director (Industries),
    All States/UTs

Promulgation of Ordinance on Interest on Delayed Payment to
Small Scale and Ancillary Industrial Undertakings.

Sir,

         An Ordinance (No.15 of 1992) titled "The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Ordinance, 1992" has since been promulgated and published in the gazette of India, Extraordinary, Part-2, Section-1 on 23rd September, 1992. A copy of the same is enclosed for your information with the request to bring it to the knowledge of all concerned for adherence. It is also requested that the contents of the Ordinance may be given wide publicity.

  1. This Department is keen to assess the impact of the Ordinance as per its objectives. Hence, it is requested that feed back on the impact of the ordinance at the field level may be made available to us. This will also enable the department to assess the shortcomings, if any, in the Ordinance so that corrective measures may be taken.

    This may be treated as Most Urgent.

Yours faithfully

Sd/-
(RAJU SHARMA)
Director (SSI-Board)

 

 

 

  1. THE GAZETTE OF INDIA EXTRAORDINARY

(PART-II)

 

 

Definitions : 2. In this Ordinance, unless the context otherwise requires-

  1. "ancillary industrial undertaking" has the meaning assigned to it by clause (aa) of Section 3 of the Industries (Development and Regulation) Act, 1951;

  2. "appointed day" means the day following immediately after the expiry of the period of thirty days from the date of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier.

Explanation - For the purposes of this clause -

  1. "the day of acceptance" means,-

    1. the day of the actual delivery of goods or the rendering of services; or

    2. where any objection is made in writing by the buyer regarding acceptance of goods or services within thirty days from the day of the delivery of goods or the rendering of services, the day on which such objection is removed by the supplier;

  2. "the day of deemed acceptance" means, where no objection is made in writing by the buyer regarding acceptance of goods or services within thirty days from the day of the delivery of goods or the rendering of services, the day of the actual delivery of goods or the rendering of services;

    1. "buyer’ means whoever buys any goods or receives any services from a supplier for consideration;

    2. "goods" means every kind of movable property other than actionable claims and money;

    3. "small scale industrial undertaking" has the meaning assigned to it clause (j) of section 3 of the Industries (Development and Regulation) Act, 1951;

 

 

 

Registered No.DL-33004/92

THE GAZETTE OF INDIA
EXTRAORDINARY
PART II - SECTION I
PUBLISHED BY AUTHORITY

No. 60

New Delhi, Wednesday, September 23, 1992/Asvina 1, 1914

Separate paging is given to this Part in order that
it may be filed as a separate compilation.

MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS
(Legislative Department)
New Delhi, the 23rd September, 1992/Asvina 1, 1914 (Saka)

THE INTEREST ON DELAYED PAYMENTS TO
SMALL SCALE AND ANCILLARY INDUSTRIAL
UNDERTAKINGS ORDINANE, 1992
No.15 of 1992

Promulgated by the President in the Forty-third Year of the Republic of India

An Ordinance to provide for and regulate the payment of interest on delayed payments to small scale and ancillary Industrial undertakings and for matters connected therewith or incidental thereto.

WHEREAS Parliament is not in session and the President is satisfied that circumstances exist which render it necessary for him to take immediate action;

Now, THEREFORE, in exercise of the powers conferred by clause (1) of article 123 of the constitution, the President is pleased to promulgate the following Ordinance :-

  1. Short title, extent and commencement

    1. This Ordinance may be called the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Ordinance, 1992.

    2. It extends to the whole of India except the State of Jammu and Kashmir.

    3. It shall come into force at once.

  2. "supplier" means an ancillary industrial undertaking or a small scale industrial undertaking holding a permanent registration certificate issued by the Directorate of Industries of a State or Union territory.

  3. Liability of buyer to make payment

    Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day.

  4. Date from which and rate at which interest is payable

    Where any buyer fails to make payment of the amount to the supplier, as required under section 3, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay interest to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at such rte which is five per cent, point above the floor rate for comparable lending.

    Explanation-For the purposes of this section, "floor rate for comparable lending" means the highest of the minimum lending rates charged by scheduled banks (not being co-operative banks) on credit limits in accordance with the directions given or issued to banking companies generally by the directions given or issued to banking companies generally by the Reserve Bank of India under the Banking companies generally by the Reserve Bank of India under the Banking Regulation Act, 1949.

  5. Liability of buyer to pay compound interest

    Notwithstanding anything contained in any agreement between a supplier and a buyer or in any law for the time being in force, the buyer shall be liable to pay compound interest (with monthly rests) at the rate mentioned in section 4 on the amount due to the supplier.

  6. Recovery of amount due

    The amount due from a buyer, together with the amount of interest calculated in accordance with the provisions of sections 4 and 5, shall be recoverable by the suppler from the buyer by way of a suit or other proceeding under any law for the time being in force.No appeal against any decree, award or other order shall be entertained by any court or other authority unless the appellant (not being a supplier) has deposited with it seventy-five per cent, of the amount in terms of the decree, award or as the case may be, other order in the manner directed by such court or, as the case may be, such authority.

  7. Appeal

    No appeal against any decree, award or other order shall be entertained by any court or other authority unless the appellant of the amount in terms of the decree, award or as the case may be, other order in the manner directed by such court or, as the case may be, such authority.

  8. Requirement to specify unpaid amount with interest in the annual statement of accounts

    Where any buyer is required to get his annual accounts audited under any law for the time being in force, such buyer shall specify the amount together with interest in his annual statement of accounts as remains unpaid to any supplier at the end of each accounting year; Notwithstanding anything contained in the Income-tax Act, 1961, the amount of interest payable or paid by any buyer, under or in accordance with the provisions of this Ordinance, shall not, for the purposes of computation of income under that Act, be allowed as deduction.

  9. Interest not to be allowed as deduction from income

    Notwithstanding anything contained in the Income-tax Act, 1961, the amount of interest payable or paid by any buyer, under or in accordance with the provisions of this Ordinance, shall not, for the purposes of computation of income under that Act, be allowed as deduction.

  10. Over-riding effect

    The provisions of this Ordinance shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

Shankar Dayal Sharma
President

K.L. Mohanpuria
Secretary to the Govt. of India


 

 

RECD.No.PLNFS.BC.65/06.03.01/92-93

January 21, 1993
Magha 1, 1914

All Scheduled Commercial Banks

Dear Sir,

Small Scale Service and Business
(Industry related) Enterprises (SSSBEs)

     Please refer to our circular RPCD.No. PLNFS BC. 95/PS. 72-91/92 dated 28 February 1992, advising that advances to Small, Tiny and Industry Related Service/Business Enterprises have investment upto Rs.5 lakhs in fixed assets, excluding land and building, and which are located in any village/town irrespective of its population, would e entitled for benefits/concessions as available to industries in Small Scale Sector. In this connection it is clarified that SSSBEs can be registered in any part of the country, without any locational restriction (including cities/metropolitan areas) and are eligible for the same benefits/concessions that are admissible to small scale industries, provided they satisfy the above investment criteria.

Yours faithfully,

Sd/-
(S.JOHN)
Joint Chief Officer


 

 

RPCD.No.PLNFS.BC.99/06.02.31/92-93

April 17, 1993
Chaitra 27, 1915

All Scheduled Commercial Banks

Dear Sir,

Report of the Committee to examine the adequacy of
institutional credit to the SSI Sector and related aspects

         Please refer to the circular No.CPC.BC.129/92-93 dated 7 April 1993 addressed by our governor to all scheduled commercial banks. As mentioned therein, considering the contribution of the SSI sector to overall industrial production, exports and employment and also recognising the need to give a fillip to this sector, a special package of measures has been devised to ensure adequate and timely credit to this sector. While doing so, the recommendations of the Committee to Examine the Adequacy of Institutional Credit to the Small Scale Industries Sector an Related Aspects headed by Shri P.R. Nayak and other factors have been taken into account. The salient features of the package are set out below:

  1. Examination of bank finance profile of working capital to the small scale sector by the Committee has revealed that this sector as a whole received a level of working capital which was only 8.1 per cent of its output. The village industries and the smaller tiny industries among them could get working capital finance to the extent of only about 2.7 per cent of their output. Banks are, therefore, advised to give preference to village industries, tiny industries and other small scale units in that order, while meeting the credit requirements of the small-scale sector.

  2. At present norms for inventory and receivables are applicable to all units enjoying aggregate fund-based working capital credit limits of Rs. 10 lakhs and above from the banking system. Units enjoying limits of Rs. 10 lakhs and above but upto Rs. 50 lakhs are subject to the first method of lending, as recommended by the Tandon Committee, for assessment of their Maximum Permissible Bank Finance (MPBF). It has been decided that henceforth for the credit requirements of village industries, tiny industries and other SSI units having aggregate fund-based working capital credit limits upto Rs. 50 lakhs from the banking system, the norms for inventory and receivables as also the First Method of Lending will not apply. Instead such units may be provided working capital limits computed on the basis of a minimum of 20 per cent of their projected annual turnover for new as well as existing units. The banks may satisfy themselves about the reasonableness of the projected documents such as returns filed with sales-tax/revenue authorities and also ensure that the estimated growth during the year is realistic. These SSI units would be required to bring in 5 per cent of their annual turnover as margin money. In other words, 25 per cent of the output value should be computed as working capital requirement of which atleast four-fifths should be provided by the banking sector, the balance one-fifth representing the borrower’s contribution towards margin for the working capital. In cases where output exceeds the projections or where the initial assessment of working capital is found inadequate, suitable enhancement in the working capital limits should be considered by the competent authority as and when this is deemed necessary. Drawals against the limits should be allowed against the usual safeguards so as to ensure that the same are used for the purpose intended. Banks will have to ensure regular and timely submission of monthly statements of stocks, receivables, etc. and also periodical verification of such statements vis-a-vis physical stocks. Other SSI units having aggregate fund-based working capital limits of above Rs. 50 lakhs would, however, continue to be governed by the existing guidelines on lending norms, method of lending, etc.

  3. The banks should step up the credit flow to meet the legitimate requirements of the SSI sector in full during the Eighth Five year Plan. For this purpose the banks should draw up annual credit budget for SSI sector on a bottom-up basis. Each branch of the bank should prepare an annual budget in respect of working capital requirements at all SSIs before the commencement of the year. Such budgeting should cover (a) functioning (healthy) units which already have borrowing limits with the branch (b) new units and units whose proposals are under appraisal and (c) sick units under nursing and also sick units found viable and for which rehabilitation programmes are under preparation. To the extent possible, the budget should take into account, among other relevant aspects, normal sales growth, price rise during the past year, anticipated spurt in business etc. The budget of each branch should be sent through the Regional/Zonal Office to the Head Office of the bank for consolidation and earmarking of the funds for SSI financing.

  4. Reserve Bank of India had issued a set of guidelines in February 1987, which laid down, inter alia, the definition of a sick SSI unit, viability of a sick SSI unit and the extent of reliefs/concessions which could be granted by commercial banks as part of the rehabilitation package. The definition of sick SSI unit and the extent of concessions which could be extended were subsequently modified vide our circular letters RPCD. No. PLNFS.BC.122/SIU.20/92-93 dated 8 June 1989 and 1 July 1992, respectively. In the light of the recommendations of the Committee, it has been decided to further modify the definition of a sick SSI unit and the rate of interest applicable for Working Capital Term Loan (WCTL) granted as a part of the rehabilitation package as follows:

    1. Definitions of sick SSI units
      An SSI units may be classified as sick when;

      1. any of its borrowal accounts has become a ‘doubtful’ advance i.e. principal or interest in respect of any of its borrowal accounts has remained overdue for a period exceeding 2.5 year, and

      2. there is erosion in the net worth due to accumulated cash losses to the extent of 50 per cent or more of its peak net worth during the preceding two accounting years.

    2. Interest on WCTL

      In respect of WCTL the rate of interest applicable may be 1.5 to 3.0 percentage points below the prevailing fixed rate/minimum lending rate, wherever applicable, but not more than the lowest lending rate for tiny/decentralised sector units and not more than 5 percentage points below the minimum lending rate in the case of advances of over Rs. 2 lakhs (i.e. the highest lending rate) for the other SSI units.

  5. An effective grievance redressal machinery within each bank which can be approached by the SSI in case of difficulties has to be set up. Separate instructions in this regard will follow.

  6. It is desirable that a single financing agency meets both the requirement of the working capital and term credit for small scale units. The ‘Single Window Scheme’ (SWS) of SIDBI enables the same agency-SFC or commercial bank - as the case may be, to provide term loans and working capital to SSI units having a project outlay upto Rs. 20 lakhs and working capital requirement upto Rs. 10 lakhs. The banks are advised to adopt this approach.



  7.