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Corporate Laws Central Ministry of Finance Banking (Regulation) Act, 1949

RBI issues Lending to Micro, Small & Medium Enterprises (MSME) Sector (Amendment) Directions, 2026

09-Feb-2026 | RBI/2025-26/206 FIDD.MSME & NFS.BC.No.12/06.02.31/2025-26

RBI has issued the Lending to Micro, Small & Medium Enterprises (MSME) Sector (Amendment) Directions, 2026, effective from 01st April 2026.

Key Highlights:
1. Para 4.1 has been substituted, which states that the banks should not accept collateral security of loans up to Rs. 20 lakhs, and they 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.
Banks can avail the benefit of the Credit Guarantee Scheme cover and, based on a 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 acceptance of gold and silver as collateral pledged voluntarily by borrowers for loans sanctioned by the banks up to the collateral-free limit will not be construed as a violation of the above mandate.
2. Para 6.5 has been omitted, which states that a High-Level Task Force is constituted by the Government of India to consider the various issues raised by MSME.

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