New Delhi, Feb. 6 -- Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday announced a proposal to double the limit for collateral-free loans to micro, small and medium enterprises (MSMEs) from Rs 10 lakh to Rs 20 lakh.

The revised limit will apply to loans sanctioned or renewed from April 1, 2026, he said while presenting the Monetary Policy Committee statement.

At present, collateral-free MSME loans are provided under the Pradhan Mantri Mudra Yojana (PMMY), which covers manufacturing, services and allied sectors. These loans are categorised into Shishu (up to Rs 50,000), Kishore (Rs 50,001 to Rs 5 lakh) and Tarun (Rs 5 lakh to Rs 10 lakh), and do not require collateral or processing fees.

Measures on Credit Flow and Financia...