Kolkata: Small business units will get collateral-free loans up to Rs 20 lakh, the Reserve Bank of India announced Friday, revising the upper limit of collateral-free loans from Rs 10 lakh.
Governor Sanjay Malhotra said that revision was necessary to adjust to inflation as the Rs 10 lakh limit has not been revised since 2010.
RBI MPC key takeaways: Repo rate, GDP & inflation targets
"It is indexing for inflation," he commented.
The new limit will be applicable to all loans to micro and small enterprise (MSE) borrowers sanctioned or renewed on or after April 01, 2026.
"MSMEs are a growth engine... very important component of the economy, especially from the point of view of generation of employment," Malhotra said, responding to media queries in the customary post-policy press conference.
This revision would channel a higher dose of formal credit to micro and small enterprises with limited collateral.
"With a view to facilitate improved access to formal credit, support entrepreneurial activity and strengthen last-mile credit delivery for MSEs with limited collateral, it has been decided to enhance the limit of collateral-free loans to MSEs from Rs 10 lakh to Rs 20 lakh," the governor said in his policy statement.
Governor Sanjay Malhotra said that revision was necessary to adjust to inflation as the Rs 10 lakh limit has not been revised since 2010.
RBI MPC key takeaways: Repo rate, GDP & inflation targets
"It is indexing for inflation," he commented.
The new limit will be applicable to all loans to micro and small enterprise (MSE) borrowers sanctioned or renewed on or after April 01, 2026.
"MSMEs are a growth engine... very important component of the economy, especially from the point of view of generation of employment," Malhotra said, responding to media queries in the customary post-policy press conference.
This revision would channel a higher dose of formal credit to micro and small enterprises with limited collateral.
"With a view to facilitate improved access to formal credit, support entrepreneurial activity and strengthen last-mile credit delivery for MSEs with limited collateral, it has been decided to enhance the limit of collateral-free loans to MSEs from Rs 10 lakh to Rs 20 lakh," the governor said in his policy statement.
