Nirmala Sitharaman Set to Launch UPI-Based Digital Lending Facility

05 Mar 2025 CW Team

Digital Lending to Empower MSMEs As part of this initiative, MSMEs will be able to borrow funds based on their digital transaction history, improving access to seamless, collateral-free credit.

A dedicated portal will be launched for this facility, bringing onboard major public and private sector banks to facilitate digital lending for MSMEs.

This move builds on successful digital lending pilots conducted by State Bank of India (SBI) and Bank of Maharashtra, setting the stage for a nationwide rollout.

Part of Modi 3.0’s MSME Reforms The initiative aligns with the Union Budget 2025–26, which prioritised MSME growth and financial inclusion among its 10 key development measures.

In her Budget speech, Sitharaman highlighted:

Over one crore registered MSMEs employ 7.5 crore people, contributing 36% to India’s manufacturing sector. MSMEs drive 45% of India’s total exports, positioning the country as a global manufacturing hub. To further support MSME expansion, the government enhanced investment and turnover limits for their classification to 2.5 times and 2 times, respectively, facilitating greater scale, technological advancement, and credit access.

Key Budgetary Support for MSMEs Credit guarantee cover for MSMEs doubled to Rs 100 million, unlocking Rs 1.5 trillionin additional credit over five years. Customised credit cards with a Rs 50 million limit will be introduced for micro enterprises registered on the Udyam portal, with a target of 10 lakh cards issued in the first year. A Game Changer for MSME Financing The launch of the UPI-based lending facility marks a transformative step towards simplifying credit access, reducing dependency on traditional collateral-based lending, and boosting financial inclusion for India’s small businesses.

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In a major push for India’s micro, small, and medium enterprises (MSMEs), Finance and Corporate Affairs Minister Nirmala Sitharaman is expected to launch a Unified Payments Interface (UPI)-powered digital lending facility on March 6, sources told Zee Business. Digital Lending to Empower MSMEs As part of this initiative, MSMEs will be able to borrow funds based on their digital transaction history, improving access to seamless, collateral-free credit. A dedicated portal will be launched for this facility, bringing onboard major public and private sector banks to facilitate digital lending for MSMEs. This move builds on successful digital lending pilots conducted by State Bank of India (SBI) and Bank of Maharashtra, setting the stage for a nationwide rollout. Part of Modi 3.0’s MSME Reforms The initiative aligns with the Union Budget 2025–26, which prioritised MSME growth and financial inclusion among its 10 key development measures. In her Budget speech, Sitharaman highlighted: Over one crore registered MSMEs employ 7.5 crore people, contributing 36% to India’s manufacturing sector. MSMEs drive 45% of India’s total exports, positioning the country as a global manufacturing hub. To further support MSME expansion, the government enhanced investment and turnover limits for their classification to 2.5 times and 2 times, respectively, facilitating greater scale, technological advancement, and credit access. Key Budgetary Support for MSMEs Credit guarantee cover for MSMEs doubled to Rs 100 million, unlocking Rs 1.5 trillionin additional credit over five years. Customised credit cards with a Rs 50 million limit will be introduced for micro enterprises registered on the Udyam portal, with a target of 10 lakh cards issued in the first year. A Game Changer for MSME Financing The launch of the UPI-based lending facility marks a transformative step towards simplifying credit access, reducing dependency on traditional collateral-based lending, and boosting financial inclusion for India’s small businesses.

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