New Delhi, India: The Small Industries Development Bank of India (SIDBI) is preparing to expand its MSME co-lending arrangement with Regional Rural Banks (RRBs), following a conclave aimed at increasing access to credit for businesses in rural and semi-urban areas.
SIDBI organised a conclave of the heads of Regional Rural Banks in New Delhi on August 25, 2026, chaired by Sanjay Lohiya, Secretary, Department of Financial Services (DFS). The meeting was attended by Manoj Mittal, CMD, SIDBI, senior officials from DFS, SIDBI and NABARD, along with the chairmen of all 28 Regional Rural Banks.
The discussions focused on scaling up MSME lending by combining SIDBI’s understanding of the credit requirements of small businesses with the extensive rural reach of RRBs. The proposed arrangement is expected to help increase lending in smaller towns and villages, while allowing RRBs to diversify their loan portfolios towards MSMEs.
Officials also pointed to the potential role of rule engine-based underwriting in the lending arrangement. The approach is expected to help RRBs process MSME credit while maintaining asset quality.
The conclave also highlighted the importance of using MSME cluster data to identify businesses and create a more targeted outreach strategy. The Additional Secretary, DFS, said RRBs should contribute to India’s efforts to develop a next-generation manufacturing ecosystem.
Financial awareness among MSMEs was another area discussed during the meeting. RRBs were encouraged to participate actively in Rozgar Melas conducted by state governments to help disseminate information about financial services and opportunities among MSMEs. The Joint Secretary, DFS, also suggested that MSME lending through the co-lending arrangement should become an important target for RRB branches.
At the core of the proposed expansion is SIDBI’s Co-Lending Origination Platform, an end-to-end digital system designed to make the credit process faster and paperless.
The platform enables loan applicants to receive information about in-principle sanctions shortly after submitting the required details. Digital documentation and disbursement allow approved funds to be transferred directly into customers’ bank accounts, eliminating the need to visit a branch during the process.
The platform has already produced encouraging results during a pilot involving three RRBs. Based on the pilot experience, the proposed expansion to additional RRBs is expected to improve access to credit, particularly for micro and small enterprises in rural and semi-urban areas.
The initiative brings SIDBI’s specialised MSME lending capabilities together with the broad geographic presence of RRBs, creating a digital route intended to make formal credit more accessible to smaller businesses outside major urban centres.
Source: This article is based on an official press release issued by the Press Information Bureau (PIB), Ministry of Finance, Government of India
Press Release: Press Information Bureau
