Clipped from: https://www.financialexpress.com/business/news-select-msmes-can-get-up-to-rs-25-lakh-collateral-free-loans-rbi-4136720/
Banks have also been advised to extend collateral-free advances of up to Rs 20 lakh to all units financed under the Prime Minister Employment Generation Programme, administered by the Khadi and Village Industries Commission.
Banks have also been advised to extend collateral-free advances of up to Rs 20 lakh to all units financed under the Prime Minister Employment Generation Programme, administered by the Khadi and Village Industries Commission.
Lenders can now extend collateral-free loans of up to Rs 25 lakh to borrowers with a strong credit profile as per their internal policies, according to the revised lending guidelines for micro, small and medium enterprises (MSMEs).
“Banks may, on the basis of good track record and financial position of MSE units, increase the limit to dispense with the collateral requirement for loans of up to Rs 25 lakh as per their internal policy,” the Reserve Bank of India (RBI) said in a release on Monday.
Addition to the mandatory collateral-free lending
This is in addition to the mandatory collateral-free lending limit for MSMEs being raised to Rs 20 lakh from Rs 10 lakh, as announced by RBI Governor Sanjay Malhotra in the monetary policy review on on February 6.
Banks have also been advised to extend collateral-free advances of up to Rs 20 lakh to all units financed under the Prime Minister Employment Generation Programme, administered by the Khadi and Village Industries Commission.
RBI om pledging Gold and Silver as collateral
Lenders can avail themselves of the benefits of the credit guarantee scheme cover, where applicable.
The RBI also clarified that voluntary pledging of gold and silver as collateral by borrowers, even for loans that fall within the collateral-free threshold, will not be treated as a regulatory breach.
The revised guidelines will come into effect from April 1.
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