Credit disbursement to the micro, small and medium enterprises (MSME) sector by banks has recorded significant growth over the past three years, reflecting improved access to finance for small businesses, according to government data.
As per the Reserve Bank of India (RBI), loans extended to the sector by Scheduled Commercial Banks rose from ₹16.96 lakh crore in 2022-23 to ₹22.04 lakh crore in 2023-24, and further to ₹26.43 lakh crore in 2024-25.
The information was shared in the Rajya Sabha by Minister of State for MSMEs Shobha Karandlaje in a written reply on Monday.
Karandlaje said several policy measures have been introduced to enhance credit penetration and reduce financial stress among MSMEs across the country.
The Ministry of Micro, Small and Medium Enterprises has been implementing the Credit Guarantee Scheme for Micro and Small Enterprises through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which provides collateral-free credit guarantees to eligible borrowers. Under the scheme, loans of up to ₹10 crore are eligible for guarantee coverage.
The government has also established the Self-Reliant India Fund to mobilise ₹50,000 crore for equity investment in MSMEs. Of this, ₹10,000 crore is contributed by the government, while ₹40,000 crore is expected to come from private equity and venture capital funds.
Another initiative, the Prime Minister’s Employment Generation Programme (PMEGP), provides margin money subsidies of up to 35 per cent to support the establishment of new micro-enterprises in the non-farm sector. The scheme allows project costs of up to ₹50 lakh for manufacturing units and ₹20 lakh for service enterprises.
The government also launched the PM Vishwakarma Scheme in September 2023 to provide holistic support to artisans and craftspeople engaged in 18 traditional trades. The scheme includes collateral-free loans of up to ₹3 lakh along with interest subvention of up to 8 per cent.
Under the Pradhan Mantri Mudra Yojana (PMMY), launched in 2015, eligible individuals can avail collateral-free loans of up to ₹20 lakh for small businesses in manufacturing, trading and service sectors, including activities related to agriculture.
To support businesses during the COVID-19 pandemic, the government had earlier introduced the Emergency Credit Line Guarantee Scheme (ECLGS) in May 2020 under the Aatmanirbhar Bharat package. The scheme remained operational until March 31, 2023.
Meanwhile, the RBI has also taken steps to ease lending norms. Under its guidelines for MSME lending, banks were earlier prohibited from seeking collateral security for loans of up to ₹10 lakh to micro and small enterprises. According to a circular issued in February 2026, this limit has now been increased to ₹20 lakh with effect from April 1, 2026.
The Minister said that outreach programmes are regularly conducted in coordination with banks, industry associations and state departments to improve credit availability to MSMEs across the country.
