RBI committee recommends revision of loan limit for MSMEs, SHGs

New Delhi: The Committee constituted by Reserve Bank of India (RBI) has submitted its report to the central bank recommening that the limit for collateral free lending should be increased to Rs 20 lakh for MSMEs and Self-Help Groups (SHGs), Union Minister for Micro, Small and Medium Enterprises Nitin Gadkari in written reply to a question in Lok Sabha said on Friday.

The Committee has also recommended revision of loan limit sanctioned under MUDRA to Rs 20 lakh from Rs 10 lakh, he added.

The RBI panel had submitted its report last month stating that portfolio guarantee through NCGTC for all such collateral free MSME loans may be increased i.e. proportion of guarantee coverage should be increased to 66.6-75 percent from 50 percent. A commensurate enhancement in corpus may also be done.

CGTSME would no longer provide individual covers upto Rs 20 lakh, except for such units which are at say Rs 20 lakh exposure and are now looking at further growth and therefore a transition to an individual guarantee, it added.