The Biz Reporter
Srinagar, Feb 9:
The revised lending norms announced by the Reserve Bank of India (RBI) are expected to significantly improve access to institutional credit for micro and small enterprises (MSEs) in Jammu and Kashmir, a region where small businesses often struggle to meet collateral requirements.
Under the amended directions, banks have been mandated not to seek collateral for loans up to ₹20 lakh extended to MSE units. Lenders have also been advised to provide collateral-free loans up to the same limit to enterprises financed under the Prime Minister Employment Generation Programme (PMEGP).
In a further relaxation, banks may extend collateral-free loans up to ₹25 lakh based on the borrower’s financial position and repayment track record, in line with their internal policies. Such loans may also be covered under the Credit Guarantee Scheme, wherever applicable.
The RBI clarified that acceptance of gold and silver pledged voluntarily by borrowers for loans sanctioned within the collateral-free limit would not be treated as a violation of the mandate.
Industry stakeholders in Jammu and Kashmir said the move would benefit a large number of small manufacturing units, service enterprises, artisans and startups, particularly in sectors such as handicrafts, handloom, food processing and tourism-related services, where access to credit remains a key constraint.
The amendments have been made to the Master Direction on Lending to the MSME Sector, last updated in July 2025, and are aimed at strengthening last-mile credit delivery to enterprises with limited asset bases.
The revised norms will come into effect from April 1, 2026. RBI Governor Sanjay Malhotra announced the measures during the monetary policy statement last week.
Earlier, the Union Budget 2026–27 had proposed a ₹4,000 crore top-up to the Self-Reliant India Fund to further support MSMEs across the country, including in Jammu and Kashmir.
