SIDBI’s Direct MSME Lending Jumps Fourfold In 5 Years: FM Sitharaman

New Delhi, Aug 3 (KNN) The Small Industries Development Bank of India (SIDBI) has significantly increased its direct lending to micro, small and medium enterprises (MSMEs) over the past five years, the Finance Ministry said.

In a written reply in the Lok Sabha, Finance Minister Nirmala Sitharaman noted that direct loan sanctions rose from Rs 6,124 crore in FY2021–22 to Rs 24,323 crore in FY2025–26. During the same period, SIDBI’s outstanding direct credit portfolio grew from Rs 13,930 crore to Rs 39,895 crore, indicating a sharp expansion in financial support to the sector.

Indirect lending creates wider credit flow

Sitharaman highlighted that SIDBI’s lending strategy combines direct credit with indirect financing through refinance and on-lending. Funds are extended to banks, non-banking financial companies (NBFCs), small finance banks (SFBs) and microfinance institutions (MFIs), which in turn lend to MSMEs.

This approach has helped create a multiplier effect in credit delivery. As of March 31, 2026, SIDBI’s total indirect lending portfolio stood at Rs 5.24 lakh crore.

Digital initiatives and partnerships gain traction

SIDBI has also increased its focus on digital lending to improve access to finance. Initiatives such as the GST Sahay platform aim to facilitate quicker credit for MSMEs, she noted

The institution is now a participant across all five Trade Receivables Discounting System (TReDS) platforms, enabling faster financing against invoices, the finance minister said. 

She added that it has also partnered with NBFCs and regional rural banks under co-lending arrangements to expand credit access, particularly for smaller businesses with limited access to formal finance.

Support for cluster development and rural enterprises

Sitharaman also highlighted that to strengthen MSME infrastructure, SIDBI has set up the SIDBI Cluster Development Fund (SCDF), which provides low-cost funding to state governments for developing industrial clusters.

In addition, the bank is implementing the Modernisation of Rural Enterprises (MoRE) programme, aimed at improving productivity and competitiveness in rural non-farm sectors through financial and capacity-building support.

The finance minister said the rise in lending underscores sustained government and SIDBI efforts to deepen credit access and reinforce the MSME ecosystem.

(KNN Bureau)