In a move aimed at boosting credit access for India’s micro and small enterprises, the Reserve Bank of India (RBI) has announced key relaxations in loan norms and expanded the scope of gold-backed lending. The decision, unveiled on September 29, 2025, is expected to ease liquidity stress and support festive-season business activity.
Key Highlights of RBI’s New Guidelines
1. Simplified Loan Documentation
Small businesses can now avail loans up to ₹25 lakh with streamlined KYC and reduced collateral requirements, especially for GST-registered entities.
2. Gold as Collateral – Expanded Scope
Banks and NBFCs can now offer higher loan-to-value (LTV) ratios on gold assets for business purposes, up to 85%, compared to the previous 75%.
3. Priority Sector Boost
Gold-backed loans extended to MSMEs will now qualify under priority sector lending, encouraging banks to increase disbursements.
4. Digital Lending Push
RBI has urged lenders to integrate digital onboarding and e-KYC for faster disbursal, especially in Tier-2 and Tier-3 towns.
Impact on Borrowers and Lenders
- MSMEs: Easier access to working capital ahead of festive demand
- Banks/NBFCs: Incentivized to lend more with relaxed norms and priority sector benefits
- Gold loan companies: Expected to see a surge in business lending volumes
- Rural entrepreneurs: Can leverage household gold for formal credit without complex paperwork
What This Means for the Economy
- Liquidity infusion into small business segment
- Reduced informal borrowing and reliance on high-interest private lenders
- Improved credit penetration in underserved regions
- Support for self-employment and micro-enterprise growth
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Final Takeaway
RBI’s latest move to ease small business loan rules and expand gold-backed lending is a timely intervention to support India’s entrepreneurial backbone. With simplified access and digital integration, MSMEs are better positioned to thrive during the festive quarter and beyond.