In a major relief for India’s small business ecosystem, the Reserve Bank of India (RBI) has unveiled a game-changing policy allowing micro and small enterprises (MSEs) to access loans up to ₹20 lakh without any collateral. Announced through a circular on Monday, this move is set to empower countless entrepreneurs who often struggle with limited assets.
The updated guidelines, titled ‘Loans to Micro, Small and Medium Enterprises (MSME) Sector (Amendment) Directions, 2026,’ revise existing provisions from the master directions last updated on July 23, 2025. Effective from April 1, 2026, these changes eliminate the need for security on loans up to ₹20 lakh for MSEs, streamlining access to credit.
RBI emphasized that the core aim is to bolster credit flow to the last mile, particularly for MSEs with constrained collateral. This initiative aligns with broader government efforts to fuel the MSME sector, which forms the backbone of India’s economy, employing millions and driving exports.
Just last month, the government linked postal channel exports to key incentives like duty refunds and tax exemptions. The Department of Posts (DoP), in compliance with CBIC notifications, rolled out benefits such as RoDTEP and ROSCTL from January 15, 2025. This will hugely benefit small exporters relying on postal services for shipments.
As India pushes for a self-reliant economy, such measures are critical. By reducing barriers to finance, RBI is not just aiding survival but fostering growth, innovation, and job creation in the MSME space. Entrepreneurs can now dream bigger without the weight of collateral demands.