RBI panel on MSMEs suggests Rs 20 lakh collateral-free loan under Mudra

The report has also mentioned mainstreaming the restructuring of stressed loans, considering the central bank had given a one-year window to banks to do so in January

A Reserve Bank of India (RBI) expert committee on micro, small and medium enterprises (MSMEs) has recommended doubling the cap on collateral-free loans to Rs 20 lakh from the current Rs 10 lakh. This will be extended to borrowers falling under the Mudra scheme, self-help groups, and MSMEs, said a person privy to the development.

If the central bank approves the recommendation, the banking regulator will have to amend its July 1, 2010 circular that prescribes a maximum Rs 10 lakh for collateral-free loans.

The proposal is part of a report prepared by the eight-member RBI committee tasked with reviewing the current