RBI Proposes Collateral-Free MSME Loan Cap Hike to ₹20 Lakh

• The Reserve Bank of India (RBI) has proposed increasing the collateral-free loan limit for Micro, Small, and Medium Enterprises (MSMEs) from ₹10 lakh to ₹20 lakh.
• This initiative aims to improve credit access for small businesses, fostering consumption and economic activity.
• RBI Governor Sanjay Malhotra and the Monetary Policy Committee (MPC) have maintained the repo rate at 5.25%, focusing on liquidity management.
• Experts believe the move will support businesses, especially MSMEs, by easing borrowing costs and improving cash flows, reducing reliance on informal lending.
• The central bank has already cut rates by 1.25% in 2025 and continues to inject liquidity through Open Market Operations (OMO) and Variable Rate Repo (VRR) auctions.