Current Affairs · MSME Regulatory Framework
Regarding the updated regulatory framework for the MSME sector introduced by the Reserve Bank of India in February 2026, which of the following statements best describes the revised mandate for collateral-free lending to Micro and Small Enterprises (MSEs)?
- 1The new collateral-free lending norms are applicable only to fresh loans sanctioned after January 1, 2027, while all existing loans and those up for renewal must adhere to the security requirements established under the 2019 MSME guidelines.
- 2To ensure asset quality, banks are required to treat any voluntary pledge of gold or silver as a formal violation of the collateral-free norms, thereby necessitating the classification of such loans as secured assets for capital adequacy purposes.
- 3The mandatory collateral-free limit has been set at ₹50 lakh for all MSME units, provided the borrower maintains a credit rating of BBB or above and the loan is utilized exclusively for the procurement of green technology.
- 4Banks are strictly prohibited from demanding collateral for loans up to ₹20 lakh extended to MSE units, including those under the Prime Minister Employment Generation Programme, with a discretionary provision to increase this limit to ₹25 lakh for borrowers with a sound financial track record.✓
Correct answer
Banks are strictly prohibited from demanding collateral for loans up to ₹20 lakh extended to MSE units, including those under the Prime Minister Employment Generation Programme, with a discretionary provision to increase this limit to ₹25 lakh for borrowers with a sound financial track record.
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