Hello everyone,  

Welcome to the 192nd edition of The Pattern, a weekly newsletter where we unpack the latest in finance, tech, and the economy.  Let’s dive in! 

If you’ve ever spoken to a small business owner about getting a loan, you’ve probably heard the same story. The business is running and cash is coming in. But the conversation with the lender – be it a bank or an NBFC - circles back to one question. What collateral can you pledge?

That question has shaped access to credit in India for much too long. Property, land, or machinery often determined who moved forward in the queue to access formal credit and who stayed stuck on the sidelines. 

I want to talk about two specific developments this week. One, the Reserve Bank of India has asked banks not to insist on collateral security for loans up to ₹20 lakh for micro and small enterprises. Around the same time, draft revisions to the Kisan Credit Card (KCC) framework proposed expanding farm loans to cover technology and innovation expenses. 

This edition isn’t about these news pieces themselves. What really stands out is where the focus seems to be moving. In one case, lenders are being nudged to look harder at how a business actually runs before asking for collateral. In the other, agricultural credit is beginning to reflect the reality that farm productivity today relies on tools, data, and technology as much as land or seasonal inputs. 

For MSMEs, this development is the equivalent of the conversation moving from “What do you have?” to “How does your business actually run?” Plenty of small businesses operate successfully without owning large assets. They have customers, invoices, and cash flow, yet underwriting often slows down because the paperwork does not look 'like it should’. Reinforcing collateral-free lending encourages banks to lean more on transaction trails, GST data, and repayment behaviours rather than property documents alone. 

Agriculture is seeing something similar, even if the mechanics differ. Expanding KCC eligibility to include technology investments acknowledges how farming has evolved. Inputs are no longer limited to seeds or fertilizers. Technology and data-led practices now shape outcomes just as much. 

Sure, there hasn’t been a dramatic move on rates or liquidity recently. Instead, the action seems to be happening through smaller adjustments that influence who qualifies and how credit is used. The narrative is now less about headline reforms, and more about changing the way decisions are made within the system.

For lenders, that means rethinking how risk is assessed.  Without leaning heavily on collateral, underwriting relies more on context, sector knowledge, and cash-flow visibility. Technology and data infrastructure start carrying more weight in everyday decisions. 

For borrowers, access may grow, but responsibility does too. Financial discipline, consistency, and clarity around how funds are deployed begin to matter more.  

Whether this translates into real change will depend on execution. Policy can redraw the lines, but it is the day-to-day credit decisions that will decide how far those lines move. 

Reading list

• India central bank proposes stricter rules for loan-recovery agents 

• Why good borrowers still don't get loans in India, and what lenders must fix 

• UPI may soon be accepted in Malaysia as NPCI International signs pact with PayNet 

• Transforming financial crime with generative AI 

That’s all for this week. Before I sign off, a quick update. We launched the State of Digital Lending 2026 report at Bharat FinTech Fest earlier this week.  Inside are 20+ chapters of research and operator insight built from what lenders are actually seeing on the ground. Click here if you’d like a copy. 

If you liked this edition, please forward it to friends, colleagues, and your network. Do encourage them to subscribe as well. You can also follow FinBox on LinkedIn and myself on X to keep up with all the updates.        
    
Cheers, 
Mayank