Malhotra: RBI strengthens MSME finance, fosters growth
Reserve Bank of India Governor Sanjay Malhotra emphasized the vital role of Micro, Small and Medium Enterprises (MSMEs) in India's economy. Speaking at the inauguration of MSME Day 2026, Malhotra detailed RBI's policy initiatives to expand finance access and foster growth.
RBI's eight-point finance agenda for MSMEs
Globally, MSMEs constitute 90 percent of businesses and contribute about 50 percent of total global employment.
In India, they account for 31 percent of GDP, 35 percent of manufacturing output, and nearly half of merchandise exports, supporting over 320 million livelihoods.
Governor Malhotra emphasized the Reserve Bank of India's commitment to realizing 'Viksit Bharat' through this dynamic sector, stating that a financial system must serve its smallest participants well.
The RBI has implemented several regulatory measures to expand access to finance.
These include classifying all MSME loans under Priority Sector Lending with a sub-target for micro enterprises, mandating collateral-free loans for small amounts (recently doubled from 10 lakh to 20 lakh), and expanding guarantee cover through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
The CGTMSE-guaranteed portion of loans receives zero risk weight for capital charge, providing capital incentives for banks.
Digital rails for inclusive credit
The RBI fosters structured engagement through MSME Town Hall Meetings and Empowered Committees, reviewing financing progress and addressing stressed MSMEs.
These efforts, combined with government schemes, have significantly improved formal credit.
Credit outstanding by Scheduled Commercial Banks (SCBs) to the MSME sector reached 36.79 lakh crore by December 31, 2025, growing at a CAGR of 15 percent over five years.
The Unified Lending Interface (ULI) aims to smoothen credit flow, enabling lenders to assess MSMEs using digital data via a single, consent-based interface.
Governor Malhotra urged financial institutions to invest in the digital public infrastructure (DPI) stack and view MSMEs as long-term business partners.
He also called on MSMEs to invest in technology, engage with RBI instruments, and maintain financial discipline.