MSME Reforms Boost Scale, Credit Access; ₹12,498 Cr Guaranteed, 1,371 Startups Funded

The government clarified that the new framework includes safeguards to prevent exclusion or monopolisation by larger MSMEs.

The Union Government has strengthened the Micro, Small and Medium Enterprises (MSME) ecosystem through revised classification norms, enhanced credit guarantees and expanded financing mechanisms, aimed at improving scale, technology adoption, capital access and global competitiveness.

This was stated by Minister of State for MSMEs, Sushri Shobha Karandlaje, in a written reply in the Lok Sabha.

Revised MSME classification to drive growth

The revised limits for investment and turnover under MSME classification have been introduced to enable enterprises to achieve higher efficiencies of scale, encourage technological upgradation, and improve access to finance, while remaining globally competitive.

The government clarified that the new framework includes safeguards to prevent exclusion or monopolisation by larger MSMEs. Continued support is ensured through Priority Sector Lending (PSL), public procurement preferences, and targeted MSME schemes and programmes.

Faster credit decisions for small borrowers

As per the Reserve Bank of India (RBI), banks have been advised that:

• Loans up to ₹25 lakh for Micro and Small Enterprises must be decided within 14 working days

• For loans above ₹25 lakh, timelines will follow board-approved sanction norms

Banks are also required to display all MSME-related credit information—including timelines and document checklists—prominently on their websites.

Credit guarantee cover doubled to ₹10 crore

To further ease credit access, the Credit Guarantee Scheme (CGS) for Micro and Small Enterprises has been strengthened. The guarantee cover has been enhanced from ₹5 crore to ₹10 crore, effective 1 April 2025.

As a result, during FY 2025–26 (up to 31 December 2025):

• 1,778 guarantees were approved

• Total guaranteed amount stood at ₹12,498 crore for loans in the ₹5–10 crore range

Loan applications, sanctions and disbursements under CGS are being monitored quarterly by the Empowered Committee on MSMEs, chaired by RBI, along with State Level Bankers’ Committees (SLBCs).

Credit cards for micro enterprises

The government has also rolled out a scheme to issue credit cards to Udyam-registered micro enterprises, aimed at:

• Faster and simpler access to working capital

• Promoting digital transactions

• Using transaction data to assess future credit needs and track fund utilisation

All Udyam-registered micro enterprises requiring working capital finance are eligible under the scheme.

Fund of Funds fuels startup and women-led ventures

To catalyse venture capital investments, the government’s Fund of Funds for Startups (FFS)—managed by SIDBI—continues to play a pivotal role. SIDBI provides capital to SEBI-registered Alternative Investment Funds (AIFs), which must invest at least twice the amount committed under FFS into startups.

As of 31 December 2025:

• AIFs supported under FFS invested ₹25,547.98 crore in 1,371 startups

• Of this, ₹3,802.86 crore went into 205 women-led startups

Strengthening India’s MSME backbone

The government said these measures collectively reflect a comprehensive approach to MSME and startup financing, balancing scale and competitiveness with inclusivity, faster credit delivery and targeted support—positioning MSMEs as a key engine of India’s economic growth.