The MSME lending chain is the story of a regulatory category that kept expanding — from "small scale industry" to "micro and small enterprises" to "micro, small and medium enterprises" — while the RBI progressively lowered the barriers to lending. Collateral-free limits went from Rs 5 lakh to Rs 10 lakh to Rs 20 lakh. Composite loans reached Rs 1 crore through a single window. The Credit Guarantee Fund (CGTMSE) grew to cover loans without requiring the bank to take any collateral at all. And the MSMED Act definitions were revised to include turnover-based criteria alongside investment, bringing millions more enterprises into the formal lending framework.
131 notifications trace this evolution.
See also: Priority Sector Lending — The Complete Framework
For the story of how MSME lending targets evolved — from definition changes to CGTMSE to TReDS — see Why Every Bank Branch Has an MSME Lending Target.