Question

As per RBI Master Directions, banks are mandated not to accept collateral security for loans up to what amount extended to units in the MSE sector?

Q: Answer-As per RBI Master Directions, banks are mandated not to accept collateral security for loans up to w...

According to the RBIs Master Directions on Lending to MSME Sector, banks are mandated not to insist on collateral security for loans up to 10 lakh provided to Micro and Small Enterprises MSEs. This policy was introduced to facilitate easier access to finance for smaller units that typically lack substantial fixed assets to offer as security. It promotes inclusive credit and encourages entrepreneurial growth by removing a key entry barrier for first-generation entrepreneurs and small business owners.