The Indian economy has achieved an impressive real GDP growth of 6.5% in FY2025, marking it as a standout performer on the global stage. Robust agricultural output, a strong recovery in rural demand, and consistent government capital expenditure have driven this positive momentum, even amidst a challenging and dynamic global environment. Although the world economic outlook is being shaped by trade tensions, tariff uncertainties, and ongoing geopolitical factors, India’s economic resilience is clearly visible. According to the World Bank’s “Global Economic Prospects” (June 2025), while global GDP growth forecast is more modest 2.3% for 2025 compared to 2.8% in 2024, and trade growth in goods and services is expected to ease to 1.8% from 3.4%, India’s performance remains a beacon of stability and promise – a testament to its growing strength and adaptability in a complex world.
For a country with a sizeable workforce, MSMEs in India with their employment creation potential act as a propeller for growth and development. They contribute to around a third of the GDP, employ over 27 crore persons and account for nearly half of the exports. Their impact spans across a wide spectrum of sectors creating value in both traditional and emerging industries such as deep tech, agritech, aerospace and defence. The sectoral diversity and the grassroots innovation capacity make MSMEs instrumental in inclusive economic development.
Various indicators point to a conducive economic environment for MSMEs. SIDBI’s Quarterly MSME Outlook Survey in June 2025 highlighted the optimism of the sector. The one-year ahead expectations are also fairly optimistic underscoring expectations of a steady business environment and continuing policy support from GoI amidst the uncertainty on the global front. On the credit front, while gross advances by Banks registered a 11% growth in FY20251, the credit to MSMEs by Banks registered a stronger growth of 14.7%, furthering financial inclusion amongst MSMEs. Robust credit growth along with low delinquencies of 1.79% as of FY20252, points to an improved credit landscape for the MSME sector. Nevertheless, the task of providing adequate credit access to the sector remains unfinished, given the estimated credit gap of ₹30 lakh crore, as estimated in SIDBI’s recently released report titled “Understanding Indian MSME Sector – Progress and Challenges”.
SIDBI has continued its path of serving the MSME sector through a comprehensive set of initiatives. Given the increasing role of MSMEs in economic development with their integrated presence across the value chains, the role played by the Bank assumes greater significance. This has in turn placed a great responsibility on SIDBI to provide all possible support to the sector in their growth path and overcoming challenges whether in terms of access to finance, inadequate infrastructure, sustainable finance, etc. SIDBI also acknowledges the positive impact of the various policy measures of Government of India such as enhancement of turnover and investment limits, increase in credit guarantee coverage, push towards digital lending, etc., which have contributed to creating the conducive environment for the MSMEs.
Mirroring the MSME sector gradually moving up on the growth path, your Bank has scaled greater heights with net profit growing to ₹4,811 crore, registering a Y-o-Y growth of 19.5% during FY2025. The loans & advances of the Bank crossed ₹4.96 lakh crore in FY2025 while negligible gross NPA at 0.04% indicate the robust health of the portfolio.
During the year, with focus on direct intervention, SIDBI scaled up its direct credit operations. In an effort to reach out to a wider section of borrowers, the Bank adopted a three-pronged strategy – firstly, expansion of branch network with opening of 26 new Branch Offices especially in locations where higher impact can be made; secondly, expanding customer outreach through partnerships with various stakeholders and lastly, rolling out new products to address the emerging needs of the MSME sector. We have leveraged digital public infrastructure for our credit underwriting process so as to enable digital lending with a faster response time. These measures resulted in direct credit operation registering a robust YoY growth of 41% reaching an outstanding figure of ₹37,781 crore.
SIDBI is leveraging technology to boost financial inclusion for MSMEs, focussing on improving credit access through digital initiatives. The GST Sahay app has enabled paperless, invoice-based lending, financing over 15,000 invoices for 1,750 customers in FY2025. New digital loan products now provide seamless approvals, while the EXPRESS loan product uses automated evaluation for faster processing.
Further, the Udyam Assist Platform (UAP), launched by SIDBI with Ministry of MSME (MoMSME) continues to drive the formalisation in the sector particularly providing a formal business identity to informal micro enterprises (IMEs) and laying the foundation for inclusive finance. It is encouraging to note that over 2.7 crore IMEs have been registered through UAP which can be potentially leveraged to improve credit delivery as also transmission of other Government support/benefits to this segment. SIDBI is currently in the process of conceptualising and piloting a credit marketplace for extending digital lending to the IMEs registered on UAP leveraging alternative data, innovative fintech solutions, and field-level engagement while bringing down the cost of credit delivery to the IMEs.
SIDBI is leveraging technology to boost financial inclusion for MSMEs, focussing on improving credit access through digital initiatives. The GST Sahay app has enabled paperless, invoice-based lending, financing over 15,000 invoices for 1,750 customers in FY2025. New digital loan products now provide seamless approvals, while the EXPRESS loan product uses automated evaluation for faster processing.
IMEs have been registered through UAP
CGTMSE credit access to micro and small enterprises
Apart from being a provider of financial assistance, your Bank expanded on various promotion and development initiatives for MSMEs to address the non-financial challenges of MSMEs. SIDBI has launched a program for development of Industry Associations in industrial clusters across India. The program aims to empower industry associations in order to understand the financial and non-financial needs of their member MSMEs to serve them better, strengthen the governance functions of the industry associations and create a steady stream of revenue for these associations to make them self-sustainable.
SIDBI is addressing MSME information gaps through surveys and insightful reports, which offers detailed analysis of MSME sector and a credit gap estimate. The Bank also launched quarterly MSME sentiment indices — MSME Business Confidence Index and MSME Business Expectations Index — starting December 2024 to track sector sentiment and performance. Additionally, SIDBI continues to publish updates like MSME Pulse and Microfinance Pulse with industry partners to highlight key MSME trends.
SIDBI also has a wide network of subsidiaries and associates that are working towards providing essential financial and non-financial services for the holistic development of the MSME sector. A mention needs to be made of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) which is celebrating its Silver Jubilee in the current year. CGTMSE has made a significant impact on credit access for micro and small enterprises, having approved over 27 lakh guarantees of amount over ₹3 lakh crore in FY2025 with cumulative number of guarantees crossing 1 crore mark amounting to ₹9.34 lakh crore. These guarantees have enabled employment generation of over 3 crore persons. These performance metrics are expected to achieve greater heights with enhancements in ceiling of guarantee coverage from ₹5 crore to ₹10 crore and reduction in annual guarantee fees for guarantees above ₹1 crore to ₹5 crore.
A reference also needs to be made of the Receivables Exchange of India Limited (RXIL), a TReDS platform set up by SIDBI to address the cash flow issues of the MSMEs by financing their trade receivables, especially from large corporates. The RXIL’s platform has so far onboarded over 40,000+ MSMEs and financed around 80 lakh invoices worth ₹175,000+ crore.
A study examining the impact of TReDS scheme highlights that MSME suppliers on the TReDS platform experienced a 23% reduction in receivable cycles, especially in the financially underdeveloped states. The analysis also highlights that with the improvement in the working capital availability, the MSMEs are able to scale their operations and improve their productivity.
Comprehensive policy initiatives and improved credit flow have positioned MSMEs to lead India’s journey toward Viksit Bharat. As global supply chains diversify and the government emphasizes indigenisation, opportunities for MSMEs are growing. The challenges ahead include expanding credit access, upskilling the workforce, and adopting new technologies. The focus on adoption of green energy and cleaner production mechanism brings business opportunities for the MSME sector. With expanded definitions and supports from government, MSMEs are now poised to make a global impact. Going forward, SIDBI plans to expand its branch network further, thereby facilitating greater access to credit and support services for MSMEs. Your Bank shall also seek to foster the development of a resilient MSME ecosystem by leveraging on the network of industry associations under the Development of Industry Associations (DIA) initiative. SIDBI’s developmental interventions will be guided by an impact-oriented approach, ensuring measurable outcomes focussing on enterprise creation. The Bank remains committed to serving the MSME sector through financial, developmental, and policy initiatives that will bring in scalability and global competitiveness in Indian MSMEs.
1 RBI Financial Stability Report
2 MSME Pulse
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