Loans to MSMEs made easier and cheaper through credit cards 

Udhayani Portal

In an attempt to empower India's micro, small, and medium enterprises (MSMEs), Finance Minister Nirmala Sitharaman, in her Union Budget 2025 speech, announced the introduction of customised credit cards for micro enterprises registered in the Udyam Portal.

"We will introduce customized Credit Cards with a Rs 5 lakh limit for micro enterprises registered on Udyam portal. In the first year, 10 lakh such cards will be issued," FM Nirmala Sitaraman said in her Budget speech for FY25-26.

This initiative is designed to simplify access to capital for MSMEs, which have long struggled with financing barriers, the FM said, during her speech, adding that this could also reduce dependence on traditional forms of borrowing, which often come with stringent conditions and paperwork.

These cards will offer competitive interest rates of 8-10 percent, significantly lower than traditional rates of 18-20 percent, making them more accessible to businesses.

There are currently 7.5 crore people employed under MSME, contributing 36 percent to manufacturing and 45 percent to exports.

"Initiatives such as enhanced credit access through credit guarantee schemes and dedicated funds for early-stage investors will encourage innovation and competitiveness, evolving the sector further," said Mahavir Lunawat, Group Founder & Managing Director, Pantomath Financial Services Group.

The Udyam portal will offer tailored credit card products for businesses based on their specific needs, revenue patterns, and growth potential, the report said.

In her address, Sitharaman highlighted that this step would contribute to the government's ongoing efforts to foster a more inclusive economy, especially as the MSME sector forms the backbone of India's economic growth.

Under the Udyam portal, the customised credit cards will also feature digital tools to assist businesses in tracking their finances, managing payments, and leveraging credit more effectively.

As part of the overall push for MSMEs, the government has also proposed a substantial increase in budgetary allocation for skill development and technology adoption for the sector.