In a major boost to credit access for micro and small enterprises (MSEs), Reserve Bank of India Governor Sanjay Malhotra on Friday announced that the limit for collateral-free loans to MSEs will be doubled from ₹10 lakh to ₹20 lakh. The move aims to improve access to formal credit, encourage entrepreneurial activity, and strengthen last-mile credit delivery to small businesses. 

“The provisions will be applicable to all loans to MSE borrowers sanctioned or renewed on or after April 1, 2026. Instructions in this regard will be issued shortly,” Malhotra said while announcing the sixth and final bi-monthly monetary policy review of the current financial year. 

On the monetary policy front, the six-member Monetary Policy Committee (MPC), at its 59th meeting held from February 4 to 6 and chaired by Governor Malhotra, unanimously voted to keep the policy repo rate unchanged at 5.25%. The Standing Deposit Facility rate was maintained at 5.0%, while the Marginal Standing Facility rate and the Bank Rate were held steady at 5.50%. 

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Last-mile financial inclusion

Highlighting efforts to further strengthen last-mile financial inclusion, the Governor said business correspondents continue to play a critical role in extending banking services to underserved, rural, and remote areas. He noted that the RBI had constituted a committee comprising officials from the central bank, the Department of Financial Services, the Indian Banks’ Association, and the National Bank for Agriculture and Rural Development (NABARD) to comprehensively review operations of the business correspondents and recommend measures to enhance their efficiency. 

Regulatory guidelines

Based on the committee’s recommendations, regulatory guidelines governing business correspondents are currently under review, and draft amendment directions will be placed in the public domain shortly for consultation, Malhotra said. 

Malhotra also announced a comprehensive review of the Kisan Credit Card (KCC) scheme, aimed at expanding coverage, streamlining operations, and addressing emerging needs of the agriculture sector. A revised set of consolidated instructions for banks covering agriculture and allied activities will be issued soon.  

Proposed changes to the KCC guidelines include standardisation of crop seasons, extension of KCC tenure to six years, alignment of drawing limits with the Scale of Finance for each crop season, and inclusion of expenses related to technological interventions.