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Informist, Monday, Feb. 9, 2026

 

--RBI notifies amended norms on lending to MSMEs

--RBI: Collateral-free loan limit for micro, small firms raised to INR 2 mln

 

MUMBAI – The Reserve Bank of India has raised the collateral-free loan limit for micro and small enterprises, to strengthen last mile credit delivery for units with limited assets to provide as collateral. Starting Apr. 1, banks can give collateral-free loans of up to INR 2 million, higher than the previous limit of INR 1 million.

 

Banks can also remove the collateral requirement for loans up to INR 2.5 million as per their internal policy, on the basis of good track record and financial position of the micro and small enterprises, the RBI said.

 

"Banks may avail the benefit of Credit Guarantee Scheme cover, where applicable," the central bank said. "However, accepting gold and silver as collateral pledged voluntarily by borrowers for loans sanctioned by the banks upto the collateral free limit, will not be construed as a violation of the above mandate."

 

Banks can also extend collateral-free loans up to INR 2 million to all units financed under the Prime Minister Employment Generation Programme administered by the Khadi and Village Industries Commission, the RBI said.  End

 

Reported by Shubham Rana

Edited by Rajeev Pai

 

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