New Delhi: The Small Industries Development Bank of India (SIDBI) organised a conclave of the Heads of Regional Rural Banks (RRBs) on August 25, 2026, in New Delhi to discuss the expansion of the SIDBI-RRB MSME Co-Lending arrangement.
The conclave was chaired by Sanjay Lohiya, Secretary, Department of Financial Services (DFS), and attended by Manoj Mittal, CMD, SIDBI, senior officials from DFS, SIDBI and NABARD, and the chairpersons of all 28 Regional Rural Banks.
The meeting focused on expanding access to institutional credit for Micro, Small and Medium Enterprises (MSMEs), particularly in rural and semi-urban areas.
SIDBI and RRBs to Join Forces to Expand MSME Lending
Addressing the conclave, DFS Secretary Sanjay Lohiya stressed the need to significantly scale up MSME lending in rural and semi-urban areas.
The proposed co-lending arrangement aims to combine the complementary strengths of SIDBI and RRBs:
- SIDBI brings its expertise and understanding of MSME credit requirements.
- RRBs provide extensive banking outreach across smaller towns and villages.
- RRBs can diversify their loan portfolios by increasing their focus on MSME lending.
- Rule engine-based underwriting is expected to support lending while helping maintain asset quality.
The initiative is expected to improve the availability of formal credit for MSMEs operating outside major urban centres.
Read also: Government Expands MSME Credit Access Through SIDBI, ECLGS 5.0; Direct Loan Portfolio Grows 36.8%
RRBs to Support Next-Generation Manufacturing
The conclave also highlighted the role of RRBs in supporting India’s ambition to become a next-generation manufacturing hub.
The Additional Secretary, DFS, emphasised the importance of using MSME cluster data to identify and reach a larger number of businesses through a more focused lending approach. RRBs were encouraged to play a more active role in financing enterprises located in local industrial and business clusters.
The discussions also emphasised the importance of improving financial awareness among MSMEs. RRBs were encouraged to participate actively in Rozgar Melas organised by state governments to help spread awareness about financial products and credit opportunities among MSMEs.
MSME Co-Lending to Become an Important Branch-Level Target
The Joint Secretary, DFS, suggested that MSME lending through the SIDBI-RRB Co-Lending arrangement should become an important target for RRB branches.
The move is aimed at encouraging greater participation from the extensive RRB branch network and ensuring that more MSMEs can access formal institutional credit.
SIDBI CMD Manoj Mittal also urged RRBs to actively participate and work towards making the co-lending arrangement successful.
SIDBI’s Digital Platform Enables Paperless MSME Loans
A key component of the initiative is SIDBI’s Co-Lending Origination Platform, an end-to-end digital system designed to simplify and accelerate the MSME credit process.
The platform provides a faster and paperless credit journey, covering loan origination through sanction and disbursement.
Key features include:
- Faster processing of MSME loan applications
- In-principle sanction information within a short turnaround time after submission of required details
- Digital documentation
- Paperless loan processing
- Direct disbursement into the borrower’s bank account
- No need for customers to visit a branch during the process
The digital model is intended to make credit access more convenient for MSMEs, particularly those located in rural and semi-urban regions.
Pilot Programme Shows Encouraging Results
The SIDBI-RRB co-lending arrangement has already been implemented on a pilot basis with three RRBs, with encouraging outcomes. Based on the pilot experience, the proposed expansion to additional RRBs is expected to help address the credit requirements of borrowers, particularly businesses in the Micro and Small enterprise segments.
The expansion could provide greater access to formal finance for MSMEs in areas where traditional banking access and specialised MSME lending capabilities may be limited.
Focus on Rural MSMEs and Financial Inclusion
The expansion of the SIDBI-RRB MSME Co-Lending arrangement comes with a broader focus on strengthening financial inclusion and supporting entrepreneurship outside major cities.
By combining SIDBI’s MSME lending expertise with the extensive reach of RRBs, the initiative aims to create a more efficient credit delivery mechanism for businesses in rural and semi-urban India.
About SIDBI
The Small Industries Development Bank of India (SIDBI) is the apex financial institution responsible for promoting, financing, and developing India’s Micro, Small, and Medium Enterprises (MSME) sector. Established on April 2, 1990, and headquartered in Lucknow, it operates under the regulatory supervision of the Reserve Bank of India (RBI).
Read also: SIDBI-RRB Digital Lending Platform to Boost Rural MSMEs, Expand Credit Access and Create Jobs
