In the rapidly evolving landscape of India’s economy, the role of promoters and growing companies is pivotal. They drive innovation, create jobs, and contribute significantly to the country’s GDP. However, an alarming trend in the lending sector threatens to stifle this growth—banks and financial institutions demanding exorbitant collateral multiples, often two to three times the loan amount, effectively placing undue burdens on businesses striving to expand.

Such practices not only exploit promoters but also risk choking the flow of much-needed capital into vital sectors. When lenders insist on over-collateralization, they push genuine entrepreneurs into corners where growth becomes nearly impossible, forcing many to seek informal credit sources at prohibitive costs or abandon promising projects altogether.

The ripple effects of these lending hurdles are far-reaching. Delayed or denied funding restricts production capacity, slows down infrastructure development, and impedes new ventures. Ultimately, this hampers job creation and economic advancement—contradicting the very purpose of financial institutions meant to support growth.

It is imperative that the Reserve Bank of India (RBI), as the apex financial regulator, steps in decisively to safeguard promoters and companies from such exploitative lending norms. Clear guidelines limiting collateral requirements to reasonable, risk-based levels should be mandated, ensuring transparency and fairness in credit evaluation. Additionally, expedited grievance redressal mechanisms for entrepreneurs facing undue rejections can foster trust and encourage formal credit participation.

In promoting balanced credit practices, RBI can not only protect the interests of promoters but also catalyze a healthier economic ecosystem. Supporting genuine growth ventures with accessible and fair financing is crucial for India’s continued rise on the global stage.

The time is now for the RBI to act—ensuring lenders uphold their responsibility as enablers of growth, not gatekeepers of unnecessary obstacles.