The Government of India has intensified its efforts to strengthen credit access for Micro, Small and Medium Enterprises (MSMEs) through a series of initiatives led by the Small Industries Development Bank of India (SIDBI) and the launch of the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0.
According to information shared by Minister of State for Finance Shri Pankaj Chaudhary in a written reply in the Rajya Sabha, the government has introduced several measures over the past five years to improve the flow of credit to MSMEs, expand financial inclusion, and strengthen support for underserved enterprises.
One of the most significant developments has been SIDBI’s expansion across the country. Following the announcement made in the Union Budget 2024-25, the development finance institution opened 71 new branches between April 1, 2024, and July 29, 2026, with a focus on serving major MSME clusters and improving direct access to credit.
The bank’s direct lending portfolio has also recorded substantial growth. As of March 31, 2026, SIDBI’s direct credit outstanding portfolio reached ₹51,687 crore, compared with ₹37,781 crore a year earlier, reflecting a year-on-year growth of 36.8%.
SIDBI’s refinance operations have also expanded considerably. The bank’s refinance outstanding portfolio increased from ₹3,85,327 crore in March 2025 to ₹4,50,571 crore in March 2026, registering a growth of 16.9%.
To improve access to affordable financing for smaller businesses, SIDBI has strengthened its co-lending model by collaborating with Non-Banking Financial Companies (NBFCs). During FY 2025-26, the bank also initiated co-lending arrangements with Regional Rural Banks (RRBs) to enhance credit delivery in underserved and untapped regions.
The institution has also introduced targeted initiatives to improve financial inclusion among informal enterprises. The Prayaas Scheme was launched to provide affordable credit to informal micro-entrepreneurs and micro-enterprises, with a special focus on women entrepreneurs and economically weaker sections.
In another significant step toward digital financing, SIDBI launched the GST Sahay app, which offers invoice-based, cash flow-driven credit to micro-enterprises by leveraging GST and digital transaction data.
Meanwhile, the government introduced ECLGS 5.0 in May 2026 to provide additional financial support to eligible MSMEs.
Under the revised scheme, MSMEs can access additional credit of up to 20% of their peak fund-based working capital outstanding during the fourth quarter of FY 2025-26.
One of the key features of ECLGS 5.0 is the 100% government guarantee coverage provided to member lending institutions against defaults on additional loans extended to eligible MSMEs.
The scheme also extends support to scheduled passenger airlines, which are eligible for additional credit of up to 100% of their total peak credit outstanding, including both fund-based and non-fund-based credit, during the fourth quarter of FY 2025-26. Airlines will receive 90% guarantee coverage under the scheme.
The government expects an additional credit flow of ₹2.55 lakh crore through ECLGS 5.0, benefiting MSMEs, non-MSMEs, and the aviation sector.
The latest measures underscore the government’s commitment to strengthening India’s MSME ecosystem by expanding credit access, promoting financial inclusion, supporting digital lending, and creating a more resilient financing framework for small businesses.
