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Section 10: Credit facilities

Micro, Small and Medium Enterprises Development Act, 2006 • Official Statutory Text & Practice Guide

MSME Law
3x Compound Interest
MSEFC Facilitation Council
Act 27 of 2006
Section 9 All 32 Sections of MSMED Act Section 11
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Enterprise Sec 2

Legal Commentary & Landmark Judgments: Section 10

Section 10 mandates the Central Government, in consultation with the Reserve Bank of India, to formulate policies and guidelines to ensure progressive, timely, and equitable institutional credit facilities for MSMEs.

  • RBI Co-Regulation: Directs statutory coordination between the Ministry of MSME and the Reserve Bank of India to integrate MSME credit into monetary policy.
  • Priority Sector Lending (PSL) Mandates: Forms the statutory anchor for RBI Master Directions on Priority Sector Lending, mandating commercial banks to allocate specified credit quotas to micro and small enterprises.
  • Restructuring & Stressed Assets Framework: Empowers the establishment of institutional mechanisms for debt restructuring, non-fund-based credit limits, and resolution of stressed MSME accounts prior to NPA classification.
Key Landmark Precedents:
  • Pro Knits v. Canara Bank (2024 SCC OnLine SC 1853): The Supreme Court held that the Framework for Revival and Rehabilitation of MSMEs notified by the Central Government under Section 9 and Section 10 read with RBI directives has statutory force; banks are legally obligated to consider restructuring and provide corrective action plans prior to classifying an MSME account as NPA.
  • Central Bank of India v. Ravindra (2002) 1 SCC 367: Affirmed that RBI circulars and regulatory directives issued in public interest under banking statutes read with promotional enactments are binding on all banking institutions.
Courtroom Practice & Strategic Litigation Guidance:

In SARFAESI defense before the DRT under Section 17, plead violation of Section 10 MSMED Act and the RBI MSME Restructuring Framework where the secured creditor classified the borrower's account as NPA without placing the stress before a Committee for Stressed MSMEs under the Pro Knits doctrine.

Section 9 All 32 Sections of MSMED Act Section 11