Is there a code that sets how banks should treat small businesses, and is it still followed?
Yes, the code exists. Whether a bank still follows it is its own choice, so ask. It sets minimum standards for banks dealing with small firms, with stress on transparency. Banks adopted it voluntarily. The Banking Codes and Standards Board of India has begun dissolving, and the Reserve Bank says banks may continue to follow their commitments.
What it is
The Banking Codes and Standards Board of India (BCSBI) worked with the Indian Banks' Association, the Reserve Bank of India (RBI) and member banks to draw up the Code of Bank's Commitment to Micro and Small Enterprises. It sets minimum standards of banking practice for member banks dealing with micro and small enterprises.
What the Reserve Bank says it is for
- To promote good banking practices.
- To set minimum standards for the banks that adopt it.
- To increase transparency and achieve higher operating standards.
- To promote a cordial banker-customer relationship that builds confidence in the banking system.
- It lays great emphasis on transparency and on giving the customer full information before a product or service is sold.
Is it binding?
Member banks have voluntarily adopted the Code. The Reserve Bank's Master Direction on lending to the Micro, Small and Medium Enterprises (MSME) sector also says that, while BCSBI has initiated the process of its dissolution, banks may continue to follow their commitments as hitherto under the Code. So it is a commitment a bank can keep, not a rule you can enforce on your own. The sentence before this one is our reading of the word voluntarily; we are not giving legal advice.
What you can do with it
- Ask your bank whether it still follows the Code and for a copy of its commitments.
- Ask for the full terms in writing before you sign. The Code stresses full information before a sale; asking for it in writing is our suggestion.
- If you have a complaint, our page on rejected loans explains the written reasons rule and the RBI Ombudsman.
What Senseible does here
Senseible reads fuel invoices and electricity bills into monthly records, which gives you tidy numbers to take to the bank. It does not check whether a bank follows the Code. Senseible can pass verified records to financing partners. The partner decides. Nothing is promised.
- Written reasons when a bank rejects an MSME loan
- Key facts statement for an MSME loan
- How long a bank should take on an MSME loan
- Green loan readiness check
Last reviewed 2026-11-07. Wording follows paragraph 5.3 of the Reserve Bank's Master Direction as updated on 9 February 2026. The point that the Code is not enforceable by you is our reading. Check with your bank what it still follows.