Bank Credit Scheme – The financial booster for MSMEs

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As per the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006, MSME Certificate is a compulsory requirement for every individual that is planning to start Micro, Small, and Medium Enterprises (MSME) in India. Also known as MSME Registration,  they are categorized on the basis of the investment, either in plant and machinery or investment made in Equipment in the organization.

A Micro Enterprise is one in which investments made in plant and machinery do not exceed Rs 25 lakhs if the business is related to manufacturing or production of goods. Further, the investment in equipment does not exceed Rs 10 lakhs, if the business is engaged in providing services.

Small Enterprise is referred to as a company where the investment and business’s financial worth falls between Rs 25 lakhs and Rs 5 crores.

Medium Enterprise is referred to as an enterprise if the investment and business’s financial worth is between Rs 5 crores to Rs 10 crores.

Benefits of Micro Small and Medium Enterprises

  • Creation of employment opportunities at a lower capital cost
  • Contributes to the industrialization of rural as well as backward areas
  • Contributing to the equal distribution of national income wealth

Micro Small and Medium Enterprises Registration Process

For the purpose of MSME Incorporation, it is obligatory for individuals to register the organizations by following the process. Timely registration ensures transparency and accountability of these firms and industries, thus registration of the MSMEs is a necessity.

Some steps required to register MSME are as follows –

  • Filing an application form with the concerned department of the Government.
  • Submit important details about the organization with the documents
  • Aadhar card number of the applicant
  • Provide significant details of the applicant such as name, gender, PAN number, email ID, and mobile number
  • Provide details of the firm such as name, PAN number of the enterprise, location of the plant where the manufacturing will undertake, date of the commencement of business, details of the total number of employees
  • Bank Account Number and IFS Code
  • Main Business Activity of the enterprise
  • 2 Digit NIC Code
  • Investment in Plant and Machinery / Equipment

Documents Required for MSME Registration

Documents required for a successful MSME registration are required to be submitted to the concerned authority before the mentioned time.

  • Copy of Aadhar card of the applicant
  • Name of corporation or business
  • The type of corporation
  • PAN card copy
  • Address proof of the registered office address
  • Mobile number and Email Address
  • NIC code
  • Number of employees
  • Amount Invested in Plant & Machinery / Equipment
  • Certificate of incorporation of the firm
  • Canceled cheque of current account
  • Primary business activity of the firm

National Small Industries Corporation Limited (NSIC) Registration

It is mandatory for MSMEs to register under NSIC in order to avail the benefits of Bank Credit Facilitation Scheme.

National Small Industries Corporation Limited (NSIC) was established in 1955, with the aim to promote, boost and contribute to the growth of the various MSMEs established in the country. NSIC delivers many services to MSMEs and provides solutions to issues they face in the different stages of production which includes raw material purchase, product marketing, technology attainment, etc.

NSIC registration is issued as per the Single Point Registration Scheme to the MSMEs that holds a validity of two years. Further, it must be renewed after every two years.

Benefits of NSIC Registration

NSIC registration serves many benefits to MSMEs. Let us look through some of them –

  • Free Allotment of proposals– NSIC registration permits the allotment of tenders without any cost to MSMEs that fulfill the eligibility requirements.
  • No requirements for EMD deposit – MSMEs that have NSIC registration are not required to pay Earnest Money Deposit (EMD).
  • Expansion of SSIs – NSIC has reserved approximately 358 items for purchase, specifically for Small Scale Industries, also known as SSIs, with the objective to boost this sector.
  • Assistance in Government proposals – All MSMEs bidding for government tenders within the price cap is permitted to supply up to 20% of the demand at the reduced price.
  • The benefit of Reserved Quota – From the total annual requirement of 20% supplies from MSMEs, 4% is reserved for the units owned by SC/STs category.
  • Development of MSMEs – NSIC performs several interrelated support services related to marketing, technology, finance, and other similar services to provide support to MSMEs.
  • Provides help in increasing sales – NSIC assures a minimum of 25% of the total annual purchases of products and services produced by MSEs.
  • Offer consultancy services – NSICs in India encourage entrepreneurship development, capacity building, policy and institutional framework, and business development services to the MSEs.

Documents required for NSIC Registration

  • Udyog Adhaar Memorandum (UAM) Number
  • GST certificate
  • Copy of PAN card
  • Electricity Bill or any other utility bills
  • Copy of Sales Deed
  • Proof of the existence of the business for a minimum of 3 years
  • An audited balance sheet
  • Profit and Loss account statement of the previous 3 years
  • Declaration of entry made in MSMEs Data Bank
  • Details of employees involved in production and services
  • Verified copy of ownership documents of the business location
  • Declaration Certificate from the Directors, Proprietors, and Partners irrespective of the fact that they are related, in any way, with the large-scale Units

Defining Bank Credit Facilitation Scheme

The MSMEs require credit for undertaking the activities of the business and for other purposes such as business expansion. In order to fulfill these requirements of the different small and medium-sized firms, the National Small Industries Corporation (NSIC) signed a memorandum of understanding with numerous national and private banks in India. This joint agreement is named the Bank Credit Facilitation Scheme (BCFS). This scheme aims to offer numerous MSMEs with the credit support that they need from national or private banks. The NSIC broadly helps the MSMEs in the documentation and filing process while submitting proposals to banks and other similar activities. As per the Bank Credit Facilitation Scheme, all these services are provided free of cost to small and medium-sized industries.

Features of Credit Facilitation Scheme

The points mentioned below contains not only the feature of the credit scheme but also the benefits it provides to the MSMEs. Let us go through some of the points below –

  • The scheme facilitates credit to the MSMEs by developing a unified mix of many public and private sector banks.
  • It provides an option for MSMEs to apply for a new bank or switch their current account in a particular bank to a different bank.
  • It helps the MSMEs at all the steps of the application process including documentation and lastly the submission of the form to the bank.
  • It helps the MSMEs in achieving a generous rate of interest from the banks after a favorable rating is offered to units that are under the Performance and Credit rating scheme of the Ministry.
  • Under the Credit Facilitation Scheme, MSMEs can receive finance from the banks on the basis of their leading policy, and focused attention is given to the credit proposals that are supported by NSIC.
  • To accelerate a high number of MSMEs who want to benefit from the credit.
  • To provide all kinds of support to MSMEs.

Application Process for Bank Credit Facilitation Scheme

The individual can apply for the credit scheme by filing an application form from the official website of NSIC. The form must be filled with all the required details and it must be submitted to the delegated officer.

Types of Loans Available for MSMEs

  • Term loans for the acquisition of fixed assets for establishing new units and for the purpose of expansion, modernization, and diversification of current units.
  • Working capital limits to meet the working capital requirements of the MSME units in the form of open cash credit, overdraft against book debts, and bill discounting facility.
  • Non-fund-based limits such as guarantees, letters of credit, foreign bank guarantees, foreign letters of credit, etc.

Documents Required for Bank Credit Facilitation Scheme

  • Identity Proof
  • Residential Proof
  • Business address proof
  • Asset and Liability Statements of promoters, directors, and underwriters with the recent income tax returns.
  • Rent agreement if the business premises are on a rented property.
  • Copy of SSI registration certificate or entrepreneur’s
  • The profile of the unit includes the name and address of promoters, experience, nature of the activity, the address of the offices, shareholding pattern, etc.
  • Balance Sheet with IT/ ST return of the previous three years.
  • The projected balance sheet for the next two years.
  • Application duly filled in the prescribed format.
  • CMA data in the specified format.
  • Project report for term loan requirements.
  • Estimates/ quotations/ sanctioned building plan etc.
  • Partnership Deed/ Trust Deed/ Rules / Memorandum and Articles of Association/ Certificate of Incorporation etc.
  • Authorization from Pollution Control Board/ Sanction from the Electricity Board and other legislative authorities.
  • The monthly production and sales data for the current financial year, the value of stock in process, finished goods, debtors, creditors, etc.


MSMEs must be supported by the Government and their financial and all other requirements must be fulfilled. The various schemes created specifically for them have proved that the Government has been working towards the development of the industries. MSMEs have provided countless benefits which have resulted in the growth of the economy of the country. The establishment and expansion of these enterprises, including the small industries, must be boosted and enhanced at every step of the business’s life.

Also Read: A Pet Shop: Perfect Business Idea for the Animal Lover

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