India has expanded credit support measures for rural micro, small and medium enterprises (MSMEs) through digital lending systems, credit guarantee schemes and formal registration programmes.

The measures are part of efforts to improve access to finance for businesses in rural and semi-urban areas, where MSMEs contribute significantly to employment and local economic activity. Government initiatives have focused on increasing access to formal banking channels through digital platforms and registration systems.

Under the revised MSME credit guarantee framework introduced in April 2025, the guarantee coverage limit for banks was increased to ₹1 billion from ₹500 million. The scheme provides collateral-free loan support for micro and small enterprises.

The framework also includes provisions for enterprises led by transgender entrepreneurs. Eligible businesses can receive reduced guarantee fees and higher guarantee coverage of up to 85 per cent.

The Self-Reliant India Fund, which provides equity support to MSMEs through a fund-of-funds structure, supported 682 enterprises with investments worth ₹154.42 billion by November 2025, according to government data. The Union Budget for 2026-27 allocated an additional ₹20 billion to the programme.

India has also expanded formalisation efforts through the Udyam registration platform and related schemes aimed at informal and rural businesses. Registered MSMEs become eligible for government procurement opportunities, subsidies and institutional credit access.

The Emergency Credit Line Guarantee Scheme (ECLGS), introduced during the COVID-19 pandemic, issued guarantees worth ₹3.61 trillion covering around 11.9 million borrowers by January 2023. A State Bank of India research report cited by the government stated that the scheme helped prevent nearly 1.46 million MSME accounts from becoming non-performing assets.

Digital lending activity in India has increased in recent years due to wider smartphone access, Aadhaar-based identity verification systems and digital payment infrastructure. Digital credit platforms are increasingly being used for MSME loan disbursals, including among first-time borrowers and businesses in non-urban areas.