New Delhi, Feb. 10 -- The Reserve Bank of India (RBI) has increased the limit for collateral-free loans to micro and small enterprises (MSEs) to Rs 20 lakh, under the Lending to Micro, Small & Medium Enterprises (MSME) Sector (Amendment) Directions, 2026 issued on Monday.

The revised norms will come into force from April 1, 2026.

The changes amend the existing Master Direction on MSME lending and are aimed at improving access to formal credit for smaller enterprises that often lack assets to offer as collateral.

Under the amended framework, banks have been directed not to seek collateral security for loans of up to Rs 20 lakh extended to MSE units.

The same collateral-free limit will apply to beneficiaries covered under the Prime Mini...