No collateral for micro and small enterprise loans up to ₹20 lakh Collateral-free MSE loans
Banks must not take collateral security from a micro or small enterprise on loans up to ₹20 lakh sanctioned or renewed from 1 April 2026.
Last updated on
- Status
- Open
- Run by
- Reserve Bank of India
What you get
- No collateral security on loans up to ₹20 lakh to micro and small enterprise units
- Banks may choose to go up to ₹25 lakh without collateral for units with a good track record and sound finances, under their own policy
- Banks may use a credit guarantee scheme cover where it applies, instead of asking you for collateral
- Banks are also advised to give PMEGP loans up to ₹20 lakh without collateral
- If you choose to pledge gold or silver yourself within this limit, the bank is not breaking the rule
Who can apply
- Micro and small enterprises.
- The most on offer is ₹20 lakh.
- The unit must be a micro or small enterprise under the MSMED Act
- Applies to loans sanctioned or renewed on or after 1 April 2026
- Applies to scheduled commercial banks, which include public sector, private and small finance banks. The RBI direction excludes regional rural banks such as Kerala Grameena Bank, and co-operative banks such as Kerala Bank are not covered by it
How to apply
- When you apply for or renew a loan up to ₹20 lakh, ask the branch to confirm in writing that no collateral is needed
- If the branch still asks for collateral, complain in writing to the bank's grievance officer
- If the bank does not reply within 30 days, or you are not satisfied, complain to the RBI Ombudsman at cms.rbi.org.in
In person, your bank branch
In Kerala, applies at every branch of a scheduled commercial bank in Kerala. Ask the branch to apply it when you take or renew a loan.
Where we found this
An independent guide by The Company of Four, not a government website. Schemes change often, so check every detail on the official website before you apply. Links marked ↗ open external websites that we do not run, and we are not responsible for their content. Seen something out of date? Tell us and we will look into it.