RBI Panel Suggests Doubling Collateral-Free Loan Limit To 20 Lakhs

The expert committee of the RBI formed for MSMEs has proposed to double the limit for collateral-free loans to Rs. 20 lakhs to MSMEs. A person privy to the development said the loan scheme shall be extended to borrowers under mudra scheme, MSMEs and the self-help groups.

RBI Panel Suggests Doubling Collateral-Free Loan Limit To 20 Lakhs

And on the approval by the central bank, the RBI will have to amend and prescribe a new limit to such loan offerings. For the same, penal headed by UK Sinha has submitted its report and the same shall be made public by at most on Friday. Also, on the sidelines, the committee has come up with several measures for the sustenance of MSMEs including the streamlining and re-structuring of stressed loans.

Also, at the centre, there has been a plan to amend the contours of the concept of MSMEs. As per the earlier definition of 2006, manufacturing entities with investments of less than Rs. 25 lakhs are micro, while those between Rs 25 lakh and Rs 5 crore termed small, and from Rs 5 crore to Rs 10 crore medium. For service units, the corresponding amounts were up to Rs 10 lakh for micro, Rs 10 lakh-2 crore for small, and Rs 2 crore-5 crore for medium enterprises.

But in the new proposal approved by the Cabinet, the new concept should be to know the status of the SME, should be the annual turnover and not the investment.

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