Detailed Explanation:

Answer: Option 2 — 2 Only

This question tests the understanding of MSME classification criteria and Priority Sector Lending (PSL) norms. Statement 1 incorrectly states outdated investment thresholds for medium enterprises, while Statement 2 correctly identifies that all MSME loans qualify under priority sector lending as per RBI guidelines.

❌ Statement 1 – Incorrect: The investment range of ₹15-25 crore for medium enterprises does not match any official MSME classification. Under the 2020 notification, medium enterprises were defined as units with investment up to ₹50 crore and turnover up to ₹250 crore. The 2025 revision further raised these limits to ₹125 crore investment and ₹500 crore turnover.

✅ Statement 2 – Correct: As per RBI's Master Direction on Priority Sector Lending, all bank credit to Micro, Small, and Medium Enterprises qualifies for priority sector classification, helping banks meet their PSL targets.

📝 Short Notes: MSME Classification & Priority Sector Lending

• Composite Criterion: Since 2020, both investment in plant & machinery/equipment AND annual turnover are considered for classification.
• Udyam Registration: Online registration portal introduced in 2020 for MSMEs based on self-declaration.
• Priority Sector Lending: RBI mandates that 40% of Adjusted Net Bank Credit (ANBC) for domestic banks and 32% for foreign banks must go to priority sectors.
• MSME Sub-targets: 7.5% of ANBC must be lent to Micro enterprises; all MSME loans count toward overall PSL achievement.
• Benefits: MSMEs receive collateral-free loans up to ₹10 lakh, lower interest rates, priority in government procurement, and protection against delayed payments.