msmes-to-get-20-lakh-collateral-free-loans-from-april

The Reserve Bank of India will raise the limit for collateral-free loans to micro and small enterprises from Rs 10 lakh to Rs 20 lakh from April 1, 2026, Governor Sanjay Malhotra announced on Friday.

The enhanced limit will apply to all loans sanctioned or renewed for micro and small enterprise borrowers on or after the date, as part of efforts to improve access to formal credit and strengthen last-mile lending.

“The provisions would be applicable to all loans to MSE borrowers sanctioned or renewed on or after April 1, 2026. Instructions in this regard will be issued shortly,” Malhotra said while announcing the sixth and final bi-monthly monetary policy review of the current financial year.

Highlighting the role of business correspondents, the governor said they have emerged as critical enablers of last-mile access to financial services, particularly in underserved, rural and remote areas.

The RBI has constituted a committee comprising officials from the central bank, the Department of Financial Services, the Indian Banks’ Association and the National Bank for Agriculture and Rural Development to examine the functioning of business correspondents and recommend measures to enhance their efficiency.

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Based on the committee’s recommendations, regulatory guidelines governing business correspondents are under review, and draft amendment directions will be placed in the public domain for consultation shortly, Malhotra said.

The governor also announced a comprehensive review of the Kisan Credit Card (KCC) scheme to expand coverage, streamline operations and address emerging requirements.

Revised instructions to banks will consolidate existing guidelines on agriculture and allied activities. The proposed changes include standardisation of crop seasons, extension of KCC tenure to six years, alignment of drawing limits with the Scale of Finance for each crop season, and inclusion of expenses for technological interventions.

The draft KCC guidelines will be issued shortly, he added.