A landmark announcement in the Statement on Developmental and Regulatory Policies dated Feb 6 RBI doubles the collateral-free loan ceiling under CGTMSE and similar guarantees from ₹10 lakhs to ₹20 lakhs, targeting MSMEs, women entrepreneurs, and startups. Salient features:
- Coverage Expansion: Applicable to term loans and working capital under MUDRA, Stand-Up India, and ECLGS extensions.
- Guarantee Fee Reductions: Lower upfront fees for first-time borrowers, with 85% coverage up to ₹20 lakhs.
- Digital Processing: End-to-end online applications via PSB portals, with turnaround within 15 days.
This enhancement injects vitality into MSME credit, critical for India’s job creation engine. Banks must recalibrate risk models, prioritizing sectors like agri-processing and textiles, while RBI’s nudge toward AI-driven underwriting will aid in maintaining asset quality.
Implications for Banks and the Economy
These measures collectively reinforce RBI’s dual mandate of price stability and growth, with a clear tilt toward inclusive finance. Banks are urged to align internal policies by Q1 FY27, investing in fintech for compliance. For stakeholders in Karnataka’s vibrant banking ecosystem—from public sector giants to fintechs—these reforms promise higher disbursements but demand vigilant risk management amid potential cyber threats in payments.
As RBI navigates global uncertainties, these policies underscore a commitment to ‘Viksit Bharat’. Banks that proactively adapt will not only meet regulatory expectations but also capture growth in underserved segments.
