Government Doubles ME-Card Rollout: ₹5 Lakh Credit Access for 2 Million MSMEs

Government Accelerates ME-Card Rollout to Unlock Micro Enterprise Credit

The government has significantly scaled up its flagship Micro Enterprise Card (ME-Card) initiative by doubling the rollout target from one million to two million cards in FY 2025 - 26. Announced in the Union Budget 2025 - 26, the ME-Card is designed to provide collateral-free working capital credit of up to ₹5 lakh to micro enterprises registered on the Udyam portal. Micro enterprises and MSMEs seeking more information on the scheme and registration can visit the official Ministry of MSME website at https://msme.gov.in or register their enterprise at https://udyamregistration.gov.in. This expansion reflects strong demand from micro businesses and a policy acknowledgement that lack of timely, affordable credit remains the single largest constraint on MSME growth and formalisation. With MSMEs contributing nearly 36% of India's manufacturing output and about 45% of exports, the scheme directly targets the weakest link in the credit chain, micro enterprises that operate with thin margins and limited assets. The government estimates that the expanded rollout could unlock ₹25,000 - 30,000 crore of additional credit in the current year and up to ₹1.5 lakh crore over the next five years, creating a powerful stimulus for employment, local supply chains, and grassroots entrepreneurship.

Digital-First Lending and Simplified Credit Assessment

A defining feature of the ME-Card scheme is its fully digital, simplified lending architecture, which departs sharply from traditional collateral-based MSME loans. Banks assess eligibility primarily through revenue and cash-flow indicators derived from UPI transactions, bank account activity, and the Account Aggregator framework, rather than balance sheets, property documents, or detailed financial statements. This approach enables faster approvals and significantly reduces documentation burdens that have historically excluded micro enterprises from formal credit. For many businesses, access to funds can now be achieved in days rather than weeks or months. The ME-Card functions as a revolving credit facility, valid for up to one year and renewable based on satisfactory repayment behaviour, allowing enterprises to manage seasonal demand, raw material purchases, and short-term operational needs more effectively. Importantly, the scheme allows borrowers to access ME-Card credit even if they have availed other guarantee-backed loans, provided eligibility norms are met, acknowledging the reality that micro enterprises often require multiple credit lines to sustain and grow their operations.

Stronger Guarantees and a Broader MSME Reform Ecosystem

The ME-Card initiative is reinforced by a strengthened credit guarantee framework and complementary MSME reforms announced in Budget 2025 - 26. The Credit Guarantee Fund Trust for Micro and Small Enterprises has doubled its guarantee cover from ₹5 crore to ₹10 crore, significantly reducing perceived lending risk for banks and encouraging collateral-free disbursement. Lower guarantee fees for priority sectors and enhanced support for export-oriented MSMEs further improve credit affordability and scale. At the same time, revised MSME classification norms, with higher investment and turnover thresholds, allow enterprises to grow without losing access to MSME benefits. The ME-Card also aligns with broader efforts to promote digital payments, tax compliance, and formal banking relationships, creating a virtuous cycle where digital transaction trails translate directly into credit access. More details for the ME-Card scheme can be found on; me-card-scheme-eligibility-benefits-and-budget-2025-26-updates. While successful implementation will depend on bank readiness, awareness among micro entrepreneurs, and wider adoption of digital payments, the expanded ME-Card rollout represents a decisive shift in India’s MSME financing approach, moving from asset-based lending to data-driven trust and positioning micro enterprises as integral contributors to the country’s formal economic growth.