NE ECONOMIC BUREAU
NEW DELHI, AUG 26
India’s next manufacturing surge may not be built only in metros and industrial corridors—it could be financed from the country’s smaller towns and villages. In a push to take institutional credit closer to rural entrepreneurs, the Small Industries Development Bank of India (SIDBI) has moved to expand its MSME co-lending arrangement with Regional Rural Banks (RRBs), bringing together SIDBI’s specialised MSME credit expertise and the RRB network’s deep grassroots reach.
SIDBI organised a Conclave with the Chairmen of 28 Regional Rural Banks to discuss expanding the SIDBI-RRB MSME Co-Lending arrangement.
Key highlights:
* Scale up MSME lending across rural and semi-urban areas.
* Leverage SIDBI’s MSME expertise and RRBs’ extensive rural reach.… pic.twitter.com/RJpAfCBnW8— SIDBI (Small Industries Development Bank of India) (@sidbiofficial) August 26, 2026
The SIDBI conclave of the heads of Regional Rural Banks, chaired by Sanjay Lohiya, Secretary, Department of Financial Services (DFS), was attended by Manoj Mittal, CMD, SIDBI, senior officials from DFS, SIDBI and NABARD, besides chairmen of all 28 RRBs.
- SIDBI convenes heads of 28 RRBs to expand MSME co-lending across rural and semi-urban India
- DFS Secretary Sanjay Lohiya calls for scaling up credit by combining SIDBI expertise with RRB outreach
- Digital co-lending platform promises faster, paperless sanctions and direct loan disbursals
- RRBs urged to drive MSME finance, strengthen manufacturing ecosystem and improve financial awareness
The meeting focused on expanding the SIDBI-RRB MSME Co-Lending arrangement, with particular emphasis on improving access to formal credit for micro and small enterprises in rural and semi-urban areas.
SIDBI expertise meets RRB grassroots reach
Addressing the conclave, the DFS Secretary stressed the need to substantially scale up MSME lending by leveraging the complementary strengths of the two institutions.
While SIDBI brings specialised understanding of MSME credit requirements, RRBs have an extensive presence across smaller towns and villages—creating the potential for a wider and more targeted lending network.
The arrangement is also expected to help RRBs diversify their loan portfolios by increasing their exposure to MSMEs. Rule-engine-based underwriting is expected to support faster credit decisions while helping banks maintain asset quality.
The initiative assumes added significance as policymakers seek to widen the formal financing ecosystem for smaller enterprises that often operate close to the grassroots of the economy.
Data-driven credit for msme clusters
The conclave also underlined the importance of using MSME cluster data to identify and reach large numbers of enterprises through a more focused lending strategy.
The Additional Secretary, DFS, emphasised that RRBs have an important role to play in supporting India’s emergence as a next-generation manufacturing hub.
RRBs were also encouraged to participate actively in Rozgar Melas conducted by state governments, using these platforms to spread financial awareness among MSMEs and improve their understanding of formal credit opportunities.
The Joint Secretary, DFS, suggested that MSME lending under the co-lending arrangement should become an important target for RRB branches.
SIDBI CMD Manoj Mittal, meanwhile, urged RRBs to come forward and work collectively to make the co-lending initiative a success.
Paperless credit, direct to borrower
At the heart of the proposed expansion is SIDBI’s Co-Lending Origination Platform, an end-to-end digital system designed to make the MSME borrowing journey faster and paperless.
The platform enables loan applicants to receive in-principle sanctions within a short turnaround time once the required details are submitted through the application portal.
Digital documentation and disbursement further streamline the process, with sanctioned loans being credited directly to borrowers’ bank accounts without requiring them to visit a branch at any stage.
The platform has already shown encouraging results in its pilot implementation across three RRBs.
The proposed expansion to more RRBs is expected to particularly benefit borrowers in the micro and small enterprise segments, where timely access to formal credit can determine whether a business merely survives or gets the capacity to expand.
The SIDBI-RRB partnership thus seeks to turn the vast rural banking network into a more powerful financing channel for India’s MSMEs—linking digital credit, local banking reach and specialised institutional expertise to support the next phase of entrepreneurship and manufacturing growth.
