MUMBAI: In a significant move aimed at boosting credit availability to the Micro, Small, and Medium Enterprises (MSME) sector, the State Bank of India (SBI) is set to increase the threshold limit under its instant loan scheme.
Currently, the MSME sector can avail of loans up to Rs5 crore under the ‘MSME Sahaj - End to End Digital Invoice Financing’ scheme. The bank is now planning to enhance this limit to provide greater financial access to small businesses across India.
Relevance of MSME financing
MSMEs form the backbone of India’s economy, contributing around 30 per cent of the country’s GDP and employing over 110 million people.
However, despite their critical role, these enterprises often face hurdles in accessing timely and adequate credit, which remains one of their biggest challenges.
Traditional lending processes, characterised by extensive paperwork and lengthy approval timelines, have often hindered MSME growth. To address this issue, SBI launched its ‘MSME Sahaj’ scheme, which simplifies the loan process through technology-driven, cash flow-based lending.
End-to-End digital solution
Launched last year, SBI’s ‘MSME Sahaj’ is designed to streamline the loan approval process. The scheme utilises a business rule engine and data-based assessment of credit limits, allowing MSMEs to secure loans quickly and with minimal documentation.
Through the digital platform, applicants need only provide their PAN and approval to access their GST data, after which the loan is processed within 15 to 45 minutes – without any manual intervention.
SBI Chairman C S Setty emphasised the bank’s focus on simplifying credit access for MSMEs. “We have introduced a data-driven assessment system that allows MSME borrowers to secure credit limits of up to Rs5 crore.
“The process is quick and straightforward, as all it requires is the PAN and GST data, and we can provide approval within 15-45 minutes,” he said.
Loan threshold
In a bid to further support MSMEs, SBI is now considering enhancing the current threshold limit of Rs 5 crore under the scheme.
This would provide greater flexibility and access to larger loans for businesses that require higher working capital to manage their operations and growth.
The bank’s initiative aligns with the broader government agenda of fostering the MSME sector’s growth, particularly in the post-pandemic recovery phase.
SBI’s credit offering is also backed by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), providing a safeguard to lenders by reducing the risk associated with unsecured lending.
By making lending cash-flow based and minimising dependency on collateral, SBI aims to make credit more accessible to MSMEs.
Simplifying MSME credit
SBI’s efforts to simplify credit disbursement come at a time when the government and financial institutions are pushing for more digital solutions to help businesses grow.
The digital invoicing system is designed to ensure that MSMEs can quickly access the funds they need for their working capital requirements, enabling them to focus more on business growth than on administrative hurdles.
The upcoming enhancement of the loan threshold under the ‘MSME Sahaj’ scheme is expected to further facilitate access to credit for small businesses and help strengthen the overall MSME ecosystem in India.
