Enhanced Credit Access for MSEs: RBI Doubles Collateral-Free Loan Limit

The Reserve Bank of India is enhancing collateral-free loan limits from Rs 10 lakh to Rs 20 lakh for Micro and Small Enterprises (MSEs) to boost entrepreneurship and strengthen credit delivery. These changes are effective from April 1, 2026. Additionally, the RBI is revising Kisan Credit Card guidelines to better support agricultural activities.

The Reserve Bank of India's Governor, Sanjay Malhotra, unveiled a significant policy update, doubling the collateral-free loan limit for Micro and Small Enterprises (MSEs) from Rs 10 lakh to Rs 20 lakh. This move aims to ease access to formal credit and enhance entrepreneurial ventures.

Set to take effect on April 1, 2026, these provisions are expected to bolster last-mile credit delivery for MSE borrowers across India. This announcement was made during the RBI's sixth and final bi-monthly monetary policy review of the financial year.

In parallel, the RBI is revamping the Kisan Credit Card (KCC) Scheme to expand its coverage and streamline operations. Proposed guidelines aim to standardize crop seasons, extend KCC tenure, and align drawing limits with the Scale of Finance (SoF) for each crop season, including technological expenses.

(With inputs from agencies.)