Mumbai: India’s central bank has announced steps to make credit easier for small businesses and to widen funding options for the real estate sector, in a move aimed at supporting growth and improving access to finance.
The Reserve Bank of India said it will double the limit for collateral free loans to small enterprises. From April 1, banks will be able to offer loans of up to ₹20 lakh without asking for security, compared with the current limit of ₹10 lakh. The change is expected to benefit micro and small businesses that often struggle to provide assets as collateral when seeking bank credit.
The central bank said the higher limit will help more small firms enter the formal credit system and expand their operations. Small business groups have long argued that limited access to bank loans has held back growth and job creation.
In another key decision, the RBI said banks will now be allowed to lend directly to real estate investment trusts, known as REITs. Until now, banks were restricted from such lending, leaving REITs largely dependent on capital markets for funds. The new rule is expected to provide REITs with a more stable and potentially cheaper source of long term finance.
Market participants said the move could support further development of India’s commercial property sector, especially office and retail assets held by REITs. Shares of listed REITs saw modest gains after the announcement.
These measures form part of a broader policy push by the RBI to improve financial inclusion and make banking simpler for businesses and consumers. The central bank has also signalled plans to strengthen customer protection and address gaps in the credit system.
Economists said the steps reflect the RBI’s focus on supporting economic activity while ensuring that lending remains prudent. For small businesses and real estate investors alike, the changes are likely to bring some relief in a tight and competitive credit environment.