Executive Summary:
The Ministry of Micro, Small and Medium Enterprises (MSME) addresses credit deficits in the MSME sector, estimated by the RBI in 2019 to be between Rs. 20 to Rs. 25 lakh crore. Reforms have been implemented to improve credit flow and liquidity, including measures addressing delayed receivables such as the Online Dispute Resolution (ODR) Portal launched on June 27, 2025. Further measures became effective on April 1, 2025, and November 7, 2024.
Key Points / Main Content:
Credit and Financial Estimates:
- The RBI estimated the credit gap in the MSME sector to be in the range of Rs. 20 to Rs. 25 lakh crore in 2019.
- The number of MSME accounts with Scheduled Commercial Banks (SCBs) was 243.15 lakh as of March 31, 2025.
Unified Lending Interface (ULI):
- The RBI developed the ULI to enhance credit accessibility by reducing documentation requirements and simplifying the loan application process.
Government Measures to Improve Credit Flow:
- The Credit Guarantee Scheme (CGS) for Micro and Small Enterprises (MSEs) received an additional corpus fund of Rs. 9,000 crore to enable an additional credit of Rs. 2.00 lakh crore.
- The guarantee ceiling under CGS increased from Rs. 5 crore to Rs. 10 crore, effective April 1, 2025, with guarantee coverage up to 90% for various loan categories.
- The Prime Minister's Employment Generation Programme provides Margin Money subsidy up to 35% for new micro-enterprises in the non-farm sector.
- PM Vishwakarma, launched on September 17, 2023, supports artisans and craftspeople in 18 traditional trades with loans up to Rs. 3 lakh and an 8% interest subvention.
- The Self Reliant India (SRI) Fund was established to infuse Rs. 50,000 crore as equity funding in viable MSMEs.
Addressing Delayed Payments:
- The SAMADHAAN Portal, launched on October 30, 2017, monitors outstanding dues to MSEs.
- 161 Micro Small Enterprises Facilitation Councils (MSEFCs) have been set up in States/UTs.
- The Online Dispute Resolution (ODR) Portal was launched on June 27, 2025, for digitized resolution of delayed payment cases.
Trade Receivables Discounting System (TReDS):
- The RBI issued guidelines for TReDS to facilitate the financing of trade receivables of MSMEs.
- The monetary limit for onboarding on TReDS for Corporates and CPSEs was reduced to a turnover of Rs. 250 Crore vide Notification dated November 7, 2024.
Impact Analysis:
MSMEs:
Impact: Benefit from improved credit access, reduced costs, and quicker loan approvals through schemes like CGS, ULI, and SRI Fund. Measures addressing delayed payments through the SAMADHAAN and ODR portals enhance liquidity.
Action Required: Utilize available schemes and portals to access credit and address delayed payments.
Large Customers (including Government Departments and PSUs):
Impact: Expected to adhere to timely payment settlements and may be required to participate in TReDS.
Action Required: Ensure timely payments to MSMEs and comply with TReDS guidelines, including onboarding if turnover exceeds Rs. 250 Crore.
Lenders (Scheduled Commercial Banks, Private Equity/Venture Capital Funds):
Impact: Can leverage ULI for better-informed loan decisions, reduced operational costs and utilize government schemes to provide credit to MSMEs.
Action Required: Implement ULI, participate in government schemes like CGS and SRI Fund, and facilitate financing through TReDS.
Reserve Bank of India (RBI):
Impact: Responsible for overseeing the implementation of ULI and TReDS, and for monitoring the credit flow to the MSME sector.
Action Required: Continue to monitor and refine ULI and TReDS, and assess the impact of implemented measures on the credit deficit in the MSME sector.
Key Entities Referenced
Ministry of Micro, Small and Medium Enterprises: The Indian government ministry responsible for the formulation and administration of rules, regulations and laws relating to micro, small and medium enterprises in India.
MSME sector: Refers to the Micro, Small and Medium Enterprises sector, which is a significant part of the Indian economy.
Reserve Bank of India: The central bank of India, responsible for monetary policy and regulation of the banking system.
Credit Guarantee Scheme for Micro and Small Enterprises: A scheme of the Ministry of MSME to provide credit guarantees to micro and small enterprises.
Credit Guarantee Fund Trust for MSEs: A trust that implements the Credit Guarantee Scheme for Micro and Small Enterprises.
Prime Minister's Employment Generation Programme: A scheme to provide margin money subsidy for setting up new micro enterprises.
PM Vishwakarma: A scheme launched to provide support to artisans and craftspeople of traditional trades.
Trade Receivables Discounting System: An electronic platform for facilitating the financing of trade receivables of MSMEs.
GOVERNMENT OF INDIA
MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES
LOK SABHA
UNSTARRED QUESTION NO. 3000
TO BE ANSWERED ON: 07.08.2025
CREDIT DEFICIT IN THE MSME SECTOR
3000. SHRI CHARANJIT SINGH CHANNI:
SHRI BALWANT BASWANT WANKHADE:
ADV DEAN KURIAKOSE:
Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:
(a) the estimate of credit deficit in the MSME sector by June 2025 and the proportion of
MSMEs using formal credit channels;
(b) the average payment period for large customers classified by industry; and
(c) the reforms implemented in recent years to improve credit flow and liquidity of MSMEs,
particularly addressing issues of delayed receivables?
ANSWER
MINISTER OF STATE FOR MICRO, SMALL AND MEDIUM ENTERPRISES
(SUSHRI SHOBHA KARANDLAJE)
(a): The Expert Committee on Micro, Small and Medium Enterprises, constituted by Reserve
Bank of India (RBI) in 2019 estimated the credit gap in MSME sector to be in the range of Rs. 20 to
Rs. 25 lakh crore.
As informed by RBI, the number of MSME Accounts with the Scheduled Commercial
Banks is given below:
Number of MSME Accounts with the Scheduled Commercial Banks (SCBs)
Sl. No. Financial Year No. of A/cs (in lakh)
1 As on March 31, 2023 213.32
2 As on March 31, 2024 256.97
3 As on March 31, 2025 243.15
Source: RBI
(b): RBI has developed Unified Lending Interface (ULI) for frictionless credit to transform the
lending landscape in India by making credit more accessible by reducing documentation
requirements and simplifying the loan application process. ULI eliminates the need for complex,
costly integrations with individual data providers enabling lenders to make quicker and better-
informed loan decisions, cutting approval times and reducing operational costs.
(c): To improve credit flow and liquidity of MSMEs, a number of measures have been taken by
Government of India. Some of them are:: 2 :
i. Under the Credit Guarantee Scheme (CGS) for Micro and Small Enterprises (MSEs) of
Ministry of MSME, additional corpus fund of Rs. 9,000 crore was infused into the corpus of
Credit Guarantee Fund Trust for MSEs, to enable an additional credit of Rs. 2.00 lakh crore,
at a reduced cost of credit. Further, the guarantee ceiling has been increased from Rs. 5 crore
to Rs. 10 crore (w.e.f. 01.04.2025) to MSEs, with guarantee coverage up to 90%, for various
category of loan under CGS.
ii. Prime Minister's Employment Generation Programme provides Margin Money subsidy upto
35%, for setting up of new micro enterprises, in the non-farm sector with project cost of Rs.
50 lakh and Rs. 20 lakh, for Manufacturing and Services enterprises, respectively.
iii. PM Vishwakarma, launched on 17.09.2023 to provide end-to-end support to artisans and
craftspeople of 18 traditional trades who work with their hands and tools. The Scheme
includes provision of loans upto Rs. 3 lakh with interest subvention of 8%.
iv. Self Reliant India (SRI) Fund has been set up to infuse Rs. 50,000 crore as equity funding in
those MSMEs, which have the potential and viability to grow and become large units. Under
this Fund, there is a provision of Rs. 10,000 crore from the Government of India and Rs.
40,000 crore through Private Equity/Venture Capital Funds.
v. To ensure timely payment settlements for Micro and Small Enterprises (MSEs) across the
country, Ministry of MSME launched SAMADHAAN Portal on 30.10.2017 for monitoring
of the outstanding dues to the MSEs. 161 Micro & Small Enterprises Facilitation Councils
(MSEFCs) have so far been set-up in States/UTs. Ministry of MSME has launched Online
Dispute Resolution (ODR) Portal on 27.06.2025 to provide end-to-end digitized
resolution of the delayed payment cases.
vi. RBI issued guidelines for setting up and operating the Trade Receivables Discounting
System (TReDS) to facilitates the financing of trade receivables of MSMEs from corporate
and other buyers, including Government Departments and Public Sector Undertakings
(PSUs) through multiple financiers electronically. Five entities are presently operating
TReDS. The monetary limit for onboarding on TReDS for Corporates and CPSEs has been
reduced to a turnover of Rs. 250 Crore vide Notification dated 07.11.2024.
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