Govt. Expands Credit Schemes to Bridge Rs. 80 Lakh Crore MSME Financing Gap

In response to NITI Aayog’s alarming finding that only 19% of credit demand in India’s MSME sector was formally met by FY 2021, the Government of India has ramped up its efforts to address the massive ₹80 lakh crore credit gap, the Ministry of Micro, Small and Medium Enterprises (MSME) informed in the Rajya Sabha on Monday.

Answering an unstarred question by MP Mastan Rao Yadav Beedha, Minister of State for MSME Sushri Shobha Karandlaje detailed a series of initiatives, particularly enhancements to the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which has seen a significant boost in outreach and support mechanisms in recent years.

Between 2022 and 2025 alone, the Ministry extended 56.04 lakh credit guarantees worth ₹6.12 lakh crore under CGTMSE—nearly double the ₹3.21 lakh crore guaranteed from 2000 to 2022. The individual guarantee limit per borrower has also been increased from ₹5 crore to ₹10 crore effective April 1, 2025.

The Minister also highlighted that credit outstanding to MSMEs from Scheduled Commercial Banks has risen steadily:

₹22.6 lakh crore in FY 2022-23
₹27.25 lakh crore in FY 2023-24
₹31.08 lakh crore in FY 2024-25

In addition to expanding central schemes like the PM Employment Generation Programme, Mudra Yojana, PM Vishwakarma Yojana, and Self-Reliant India (SRI) Fund, the Government is working with state-level agencies and financial institutions. Although there is no confirmation of a dedicated proposal for state-level financial facilitation cells, the Ministry clarified that programmes to boost credit access in underserved regions—including Andhra Pradesh—are actively being conducted through CGTMSE, SIDBI, banks, and state MSME departments.

These measures aim to not only bridge the credit gap but also increase financial inclusion and resilience across the country’s vast MSME sector.

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Mariya Paliwala

Mariya is the Senior Editor at Juris Hour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.

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