New Delhi: The Government has outlined a series of initiatives undertaken over the past five years to strengthen credit flow to Micro, Small and Medium Enterprises (MSMEs), including the expansion of the Small Industries Development Bank of India (SIDBI), new digital lending initiatives and the rollout of the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0.
The latest measures, shared in a written reply in the Rajya Sabha by Minister of State for Finance Shri Pankaj Chaudhary, aim to improve access to affordable finance, expand institutional lending and strengthen financial inclusion for MSMEs across the country.
SIDBI Expands Network Across MSME Clusters
Following the Union Budget announcement for FY 2024–25, SIDBI has significantly expanded its physical presence by opening 71 new branches across India between 1 April 2024 and 29 July 2026.
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The expansion is intended to strengthen the Bank’s outreach in major MSME clusters and improve direct access to credit for small businesses across the country.
Direct Credit Portfolio Records 36.8% Growth
SIDBI’s direct lending portfolio registered strong growth during FY 2025–26.
As of 31 March 2026:
- Direct credit outstanding portfolio: ₹51,687 crore, up from ₹37,781 crore as on 31 March 2025, registering a 36.8% year-on-year growth.
- Refinance outstanding portfolio: ₹4,50,571 crore, compared with ₹3,85,327 crore a year earlier, recording a 16.9% year-on-year growth.
The Bank also expanded its refinance operations to support Primary Lending Institutions (PLIs), enabling them to extend greater credit to MSMEs.
New Lending Products Target Underserved Enterprises
SIDBI has introduced several initiatives to improve credit accessibility, particularly for underserved and first-time borrowers.
Among the key initiatives are:
- A co-lending product with Non-Banking Financial Companies (NBFCs) to provide affordable credit to smaller MSMEs.
- Co-lending arrangements with Regional Rural Banks (RRBs) during FY 2025–26 to strengthen credit delivery in underserved and untapped regions.
- The Prayaas Scheme, aimed at facilitating affordable credit for informal micro-entrepreneurs and micro-enterprises, especially women and economically weaker sections.
- The GST Sahay App, which offers on-tap invoice-based, cash flow-based small-value loans to micro enterprises using GST trade data and digital lending frameworks.
ECLGS 5.0 to Support Additional Credit Flow
The Government introduced Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 in May 2026, to provide additional credit support for eligible borrowers.
Under the scheme:
- Eligible MSMEs can avail additional credit of up to 20% of the peak fund-based working capital outstanding during the fourth quarter of FY 2025–26.
- Member Lending Institutions (MLIs) will receive 100% guarantee coverage against defaults on the eligible additional credit extended to MSMEs.
- Scheduled passenger airlines are eligible for additional credit of up to 100% of their total peak credit outstanding (both fund-based and non-fund-based) during the fourth quarter of FY 2025–26, with 90% guarantee coverage.
According to the Government, ECLGS 5.0 envisages an additional credit flow of ₹2.55 lakh crore for MSMEs, non-MSMEs and scheduled passenger airlines.
Government Focuses on Strengthening MSME Credit Ecosystem
The initiatives include branch expansion, refinance support, digital lending products and credit guarantee mechanisms aimed at improving credit flow to MSMEs across the country.
