New Delhi: The government’s encouragement for growth through Micro, Small and Medium Enterprises (MSMEs), through credit guarantee schemes and Udyam registrations, has been a key driver for credit expansion, according to a report by Axis Bank.
Lower interest rates, faster underwriting by banks using digital tools and government-backed credit guarantee schemes have boosted the growth in credit availability for MSMEs, surpassing Rs.40 lakh crore by mid-2025. According to data by the Reserve Bank of India (RBI), MSME credit has grown by 14.1% this year, surpassing retail loans and service loans, which are at 11.7% and 11.2% respectively.
The government’s credit guarantee schemes have helped boost trust among MSME clients, with the number of guarantees issued by the government surging from 5.2 million in 2021 to almost 11.8 million in FY 2024-25, as per government sources.
The Axis Bank report noted that the MSME loan quality has remained stable, with overdue loans under 90 days remaining at 1.7% and those under 180 days at 1.2%.
The government’s Udyam registrations scheme has also boosted credit growth, helping many MSMEs enter into the formal registration system. With almost 5.7 crore MSMEs registered on the Udyam Platform, banks can now sanction loans more quickly, with greater data availability and transparency.
The lack of collateral required, along with the easing of government red tape, has helped MSMEs boost their operations. The government is actively pushing MSME’s to increase its exports through its Export Promotion Mission, which now stands at more than 45% of the total exports from India.
