Business News | RBI Allows Collateral Free Loans of Up to Rs 20 Lakh to MSEs
Get latest articles and stories on Business at LatestLY. "Banks are mandated not to accept collateral security in the case of loans up to Rs 20 lakh extended to units in the MSE sector. Banks are also advised to extend collateral-free loans up to Rs 20 lakh to all units financed under the Prime Minister Employment Generation Programme (PMEGP) administered by KVIC," RBI said in its circular.
Mumbai (Maharashtra) [India], February 9 (ANI): The Reserve Bank of India (RBI) on Monday allowed collateral free loans of up to Rs 20 lakh to the units in the Micro and Small Enterprises (MSE) sector.
"Banks are mandated not to accept collateral security in the case of loans up to Rs 20 lakh extended to units in the MSE sector. Banks are also advised to extend collateral-free loans up to Rs 20 lakh to all units financed under the Prime Minister Employment Generation Programme (PMEGP) administered by KVIC," RBI said in its circular.
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RBI also allowed the banks to extend the loans up to Rs 25 lakh on the basis of good track record and financial position of the MSE units.
"Banks may, on the basis of good track record and financial position of the MSE units, increase the limit to dispense with the collateral requirement for loans up to Rs 25 lakh as per their internal policy," the notification read.
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Banks may avail the benefit of Credit Guarantee Scheme cover, where applicable.
"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," RBI said.
The amendment shall come into force for all loans to MSE borrowers sanctioned or renewed on or after April 01, 2026. (ANI)
(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)