90% of small and medium businesses do not get bank loans.

Our finding

Why we rated this “False”

What MSME lending looks like

Credit to small and medium enterprises is reported by banks and tracked centrally, so the aggregate is checkable.

MSME bank lending stood at ₹8.5 lakh crore in FY2014. By FY2024 it had reached ₹27.3 lakh crore — an increase of roughly 220%, more than tripling over the decade.

An economy in which 90% of small businesses cannot obtain bank credit would not produce that lending curve.

The dedicated small-loan channel

Alongside conventional bank lending, MUDRA operates as a route specifically for enterprises too small to clear standard underwriting.

It has sanctioned 57.79 crore loans worth ₹40.07 lakh crore. Of these, 12.15 crore loans worth ₹12 lakh crore went to first-time entrepreneurs. [1]

That last figure is the relevant one for this claim. First-time borrowers are, by definition, the group with no credit history — precisely the applicants a bank would ordinarily decline. Twelve crore such loans is not a picture of near-total exclusion.

The collateral problem, and what changed

The real obstacle for a small enterprise has usually been collateral rather than the loan itself. A firm without property to pledge fails at the security requirement regardless of how sound its business is.

The guarantee framework addresses that directly. The maximum guarantee-backed loan size was raised to ₹10 crore, and ₹9,000 crore was infused into the guarantee fund to support an estimated ₹2 lakh crore of additional micro and small enterprise credit. By December 2024, 1.01 crore loans worth ₹8.07 lakh crore carried government guarantees.

A guarantee shifts default risk from the lender to the fund, which is what allows a bank to lend against a business case instead of against property.

Redefining who counts as an MSME

Under the Aatmanirbhar Bharat reforms, the investment thresholds defining each category were raised substantially: micro from ₹25 lakh to ₹2.5 crore, small from ₹5 crore to ₹25 crore, and medium from ₹10 crore to ₹125 crore.

This is worth flagging honestly, because it cuts both ways. Widening the definition brings more enterprises inside MSME schemes and credit windows — a genuine expansion of access. It also means MSME lending totals across the two periods are not measuring an identical population, so the growth figure reflects both more lending and a broader category.

Where the claim goes wrong

The 90% figure is presented as the current share of small and medium businesses unable to obtain bank credit. It is not consistent with lending that tripled over the decade, with 57.79 crore MUDRA sanctions, or with 1.01 crore guarantee-backed loans.

What is still difficult

Access is not the same as adequate access, and aggregate growth conceals a lot.

Many small firms still borrow at rates well above what larger companies pay, receive less than they applied for, or wait long enough that the working-capital need has passed. Informal and unregistered enterprises — a large share of India's small business population — remain largely outside the formal lending system altogether.

So there is a genuine credit-access problem for small enterprises in India. It is a problem of cost, sufficiency and reach into the informal sector, rather than the near-total exclusion the claim describes.

In short

MSME bank lending went from ₹8.5 lakh crore to ₹27.3 lakh crore in a decade, with 57.79 crore MUDRA loans and 1.01 crore guarantee-backed loans alongside it. Credit remains costly and uneven for small firms — but 90% exclusion is not what the lending data shows.