The Small Industries Development Bank of India (SIDBI) organised a conclave of the heads of Regional Rural Banks (RRBs) in New Delhi on Tuesday to discuss expanding the SIDBI-RRB MSME Co-Lending arrangement and strengthening credit access for micro, small and medium enterprises in rural and semi-urban areas.
The conclave was chaired by Sanjay Lohiya, Secretary, Department of Financial Services (DFS), and was attended by Manoj Mittal, CMD, SIDBI, senior officials from DFS, SIDBI and NABARD, and the chairmen of all 28 Regional Rural Banks.
Addressing the gathering, the DFS Secretary stressed the need to scale up MSME lending in rural and semi-urban areas by combining SIDBI’s expertise in understanding the credit requirements of MSMEs with the extensive outreach of RRBs across smaller towns and villages.
The proposed co-lending arrangement is also expected to help RRBs diversify their loan portfolios by increasing their focus on MSME lending. Rule engine-based underwriting is expected to support faster credit assessment while helping banks maintain asset quality.
Focus on MSME clusters and manufacturing
The Additional Secretary, DFS, highlighted the importance of using MSME cluster data to identify and reach a larger number of enterprises through a more focused lending approach.
RRBs were also encouraged to contribute to India’s ambition of becoming a next-generation manufacturing hub. They were urged to participate actively in Rozgar Melas organised by state governments to promote financial awareness among MSMEs.
The Joint Secretary, DFS, suggested that RRBs make MSME lending under the co-lending arrangement an important target for their branches.
SIDBI CMD Manoj Mittal also called upon RRBs to actively participate in the initiative and work towards making the co-lending arrangement successful.
Digital platform to speed up credit delivery
A key component of the arrangement is SIDBI’s Co-Lending Origination Platform, an end-to-end digital system designed to provide borrowers with a faster and paperless credit journey.
The platform enables quicker processing, sanction and disbursement of loans. Once applicants submit all required details through the application portal, they are informed of their in-principle sanction within a short turnaround time.
Digital documentation and disbursement further simplify the process, with sanctioned funds being transferred directly to borrowers’ bank accounts. Applicants do not need to visit a bank branch at any stage of the process.
The platform has already been piloted at three RRBs, with encouraging results. Based on the pilot experience, the proposed expansion to additional RRBs is expected to improve access to institutional credit, particularly for micro and small enterprises operating in rural and semi-urban areas.
The initiative seeks to combine SIDBI’s specialised understanding of MSME financing with the RRB network’s deep presence in rural India, creating a wider and more efficient credit channel for small businesses and supporting the broader expansion of India’s MSME and manufacturing ecosystem.
