Double limit of collateral-free loans to small units: RBI panel

A Reserve Bank panel has suggested doubling the limit of collateral-free loans to Rs 10 lakh for micro and small enterprises (MSEs) and easing credit flow to them.

"One of the recommendations of the group is to increase the limit of collateral-free loan from Rs 5 lakh to Rs 10 lakh," RBI Executive Director and head of the working group V K Sharma said at a meeting of the National Board for Micro, Small and Medium Enterprises (NBMSME) here today.

Last year's global economic crisis had impacted the domestic MSMEs badly. While the government had announced several fiscal stimulus measures for these units, RBI had set up a working group to help them. The guarantee for the collateral-free loans is extended by the Credit Guarantee Fund Trust for MSEs (CGTMSE) so that the risk is not borne by bankers. The CGTMSE charges a fee for the guarantee.

Addressing an NBMSME meeting, MSME minister Dinsha Patel said the recommendations of the Prime Minister-appointed task-force including easing of the credit norms and revival of sick units, have been sent to various ministries and the states.