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RBI Boosts MSME Loans to Rs 20 Lakh, Proposes Fraud Compensation

The Reserve Bank of India has announced a series of measures aimed at strengthening the financial ecosystem. Key proposals include increasing the collateral-free loan limit for MSMEs from Rs 10 lakh to Rs 20 lakh and introducing a framework to compensate customers up to Rs 25,000 for losses in small-value fraudulent transactions. The central bank also plans reforms for Urban Cooperative Banks, including launching Mission-SAKSHAM for capacity building, and easing registration and branching norms for certain NBFCs. These steps are designed to enhance customer protection, credit flow, and overall financial inclusion.

Key Points: RBI Raises MSME Loan Limit, Proposes Fraud Compensation

  • Rs 20 lakh collateral-free MSME loans
  • Rs 25k compensation for small fraud
  • Reforms for Urban Cooperative Banks
  • Eased norms for certain NBFCs
2 min read

RBI proposes compensation for small-value transaction fraud; raises collateral-free MSME loan limit

RBI Governor announces measures including higher collateral-free MSME loans, Rs 25,000 fraud compensation, and reforms for UCBs and NBFCs.

RBI proposes compensation for small-value transaction fraud; raises collateral-free MSME loan limit
"We shall launch Mission-SAKSHAM... to train over 1.4 lakh participants from UCBs. - Sanjay Malhotra"

Mumbai, February 6

Reserve Bank of India Governor Sanjay Malhotra on Friday announced a set of measures aimed at enhancing customer protection, advancing financial inclusion, enhance flow of credit, strengthening urban cooperative banks, promoting ease of doing business for NBFCs, and deepening financial markets.

For customer protection, the governor proposed issuing three draft guidelines: one on mis-selling; two on the recovery of loans and the engagement of recovery agents; and three on limiting customer liability for unauthorised electronic banking transactions.

It has also been proposed to introduce a framework to compensate customers up to Rs 25,000 for losses incurred in small-value fraudulent transactions.

In the monetary policy statement, he announced that the RBI will also publish a discussion paper on potential measures to enhance the security of digital payments.

"Such measures may include lagged credits and additional authentication for a specific class of users like senior citizens," the Governor said.

In the financial inclusion space, the governor said the RBI has comprehensively reviewed the Lead Bank Scheme, the Kisan Credit Card Scheme, and the Business Correspondent Model.

"We shall issue draft revised guidelines with respect to them. A unified reporting portal will also be launched by us for better management of LBS data," he said.

Further, he announced that the Rs 10 lakh limit for collateral-free loans to MSMEs is proposed to be increased to Rs 20 lakh.

To further promote financing for the real estate sector, it is proposed to allow banks to lend to REITs, subject to certain prudential safeguards.

To strengthen urban cooperative banks, he announced four measures. "The first two pertain to raising the financial limits on unsecured loans and loans to nominal members by UCBs. We also propose to remove the tenor and moratorium-related requirements on housing loans given by Tier III and Tier IV UCBs. To strengthen the managerial and technical capacity of the UCBs, we shall launch Mission-SAKSHAM (Sahakari Bank Kshamta Nirman). The mission intends to train over 1.4 lakh participants from UCBs."

On NBFCs, he said those having no public funds and customer interface, with asset size not exceeding Rs 1000 crore, are proposed to be exempted from the requirement of registration. Moreover, it is proposed to dispense with the requirement for certain NBFCs to obtain prior approval to open more than 1000 branches.

- ANI

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Reader Comments

R
Rohit P
Doubling the collateral-free loan limit for MSMEs to Rs 20 lakh is a game-changer for small businesses like mine. Getting collateral was the biggest hurdle. Hope banks implement this quickly and without excessive red tape.
S
Sarah B
The focus on senior citizens for digital payment security is thoughtful. My dad finds the OTP process confusing sometimes. Lagged credits for suspicious transactions could prevent a lot of heartache for elderly users.
A
Aman W
Good moves overall, but the devil is in the details. "Proposed guidelines" and "discussion papers" need to become actual enforceable rules. We've seen many announcements that get diluted by the time they reach the common man.
K
Karthik V
Strengthening Urban Cooperative Banks is crucial for tier 2 and 3 cities. Mission SAKSHAM to train 1.4 lakh participants sounds ambitious. Hope it improves governance and reduces the risk of these banks failing.
N
Nisha Z
Exempting smaller NBFCs from registration if they have no public funds is a smart move for ease of business. Will reduce compliance burden for genuine players while keeping the focus on entities that handle public deposits.

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