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MSME Credit Soars 21.8% as Policy Push Fuels Robust Bank Lending Growth

The Economic Survey 2026 highlights a strong and accelerating growth in bank credit to Micro, Small, and Medium Enterprises (MSMEs), with a year-on-year increase of 21.8% in November 2025. This surge is attributed to significant policy measures including enhanced credit guarantees, the introduction of credit cards for micro-enterprises, and revised collateral norms. A key driver is the launch of a digital Credit Assessment Model by public sector banks, which has automated loan appraisals using verifiable digital data. Targeted initiatives like the Unified Lending Interface and expanded use of trade receivables platforms have further eased credit constraints for the sector.

Key Points: MSME Bank Credit Growth Hits 21.8%, Economic Survey Reveals

  • 21.8% YoY credit growth to MSMEs
  • Credit to micro & small firms up 24.6%
  • Digital Credit Assessment Model launched
  • Enhanced govt guarantee cover for loans
  • Revised MSME classification boosts access
2 min read

Bank credit to MSMEs remains robust amid policy push through guarantees, priority-sector norms: Economic Survey

Economic Survey 2026 shows robust 21.8% YoY growth in MSME credit, driven by govt guarantees, digital lending, and priority-sector norms.

"Between 1 April and 30 November 2025, over Rs 3.2 lakh crore MSME loan applications... have been sanctioned by PSBs - Economic Survey"

New Delhi, January 29

The Economic Survey 2026 highlighted that the bank credit to Micro, Small, and Medium Enterprises are rising strongly, with policy push through guarantees, digital lending platforms and priority-sector norms.

The YoY growth trend in credit for industry and services has demonstrated a moderate increase in FY26 thus far, within industry, the bank credit to the MSME sector continues to show momentum and remains robust.

In November 2025, bank credit to this sector increased by 21.8% compared to a 13% increase in November 2024. Within the MSME sector, the credit extended to the micro and small enterprises has registered an increase of 24.6% (YoY) in November 2025, up from 10.2% in November 2024, data released by the Economic Survey said.

It further highlighted that certain regulatory measures, such as revised guidelines on voluntary pledge of gold and silver jewellery as collateral for small business loans, have helped in improving credit flow to the MSME segment.

Furthermore, measures announced in the Union Budget 2025-26, such as a significant enhancement of credit availability with guarantee cover for MSMEs, the introduction of credit cards for micro-enterprises, and others, have also been beneficial to the sector.

The revision in MSMEs classification, wherein investment limits and turnover thresholds have been substantially raised, also contributed to this high growth.

The Economic Survey also highlighted the launch of the credit assessment model (CAM) by the public sector banks (PSBs) based on the digital footprints for MSMEs in 2025.

This model leveraged digitally fetched and verifiable data to enable automated loan appraisal for MSMEs, utilising objective decisioning for all loan applications and model-based limit assessment for both existing-to-bank and new-to-bank MSME borrowers. Along with improving the ease of doing business for the MSMEs, this model also integrates the credit guarantee schemes, such as the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

"Between 1 April and 30 November 2025, over Rs 3.2 lakh crore MSME loan applications, amounting to more than Rs 41.5 thousand crore, have been sanctioned by PSBs under the credit programmes of CAM," the data released from the survey said.

Measures targeted at MSMEs, including expanded credit guarantees, wider use of TReDS and the rollout of the Unified Lending Interface (ULI), have sought to ease credit constraints.

- ANI

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Reader Comments

P
Priyanka N
Good to see the numbers, but the real test is whether this credit is reaching the smallest entrepreneurs in tier-3 cities and rural areas. Often, the paperwork and collateral requirements are still a big hurdle, despite these schemes. Hope the ULI rollout addresses this gap.
A
Aman W
The revision in MSME classification was long overdue! Many growing businesses were stuck in a category that limited their loan eligibility. The new thresholds reflect ground reality much better. Kudos to the policymakers for this move.
S
Sarah B
Interesting data point. The 24.6% jump for micro and small enterprises is impressive. The CAM model using digital footprints is a smart way to assess creditworthiness, especially for new businesses without a long financial history. Hope it reduces bias in lending.
K
Karthik V
Over 3.2 lakh crore sanctioned in 8 months is no small feat! MSMEs are the backbone of our economy. This robust credit flow, especially post-pandemic, is crucial for job creation and local manufacturing. More power to our small business owners! 💪
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Nikhil C
While the policy push is commendable, we must ensure the interest rates are manageable. Easy credit is good, but if the cost of capital is too high, it burdens the business. Hope the guarantees also lead to softer rates for the entrepreneurs.

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