MSME registration is a type of registration for Micro, Small and Medium Enterprises under MSMED (Micro, Small and Medium Enterprises Development) Act. This helps small businesses to grow and acquire various benefits from the government.

MSME registration is totally voluntary. Businessmen and entrepreneurs usually get this done to utilize the advantages offered under it. The registration process is quite easy and simple. You can easily avail it (provided you have a manufacturing plant or a commercial space where you render services), many businesses opt for it over other registrations.

MSMEs are recognised by all the institutions and banks. Special schemes are drafted to recognise them as well. Banks prefer MSMEs instead of normal enterprises to lend loans. The possibility of getting a sanctioned loan is much higher in a case of MSME. Bank loan interest rates will also be lower. There may also be preferential treatment in case of delay in repayment.

Many state governments prefer enterprises which are registered under MSMED Act. Subsidy such as on power, taxes, and much more is offered by state governments. In most of the states, sales tax exemption is provided purchase preferences is given on goods produced. The enterprise may also relish excise exemption scheme and exemption from certain direct taxes in the initial years of your business.

According to the newly set rules of the financial sector, RBI has deregulated all the matters related to interest loans charge and they are governed by the very own lending rules of the banks.

The loan categories are priced with reference to the bank’s Base Rate under Udyog Aadhar.