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The Small Industries Development Bank of India held a conclave of the heads of all 28 Regional Rural Banks in New Delhi on 25 August 2026 to expand the SIDBI-RRB MSME co-lending arrangement.
The meeting was chaired by Department of Financial Services Secretary Sanjay Lohiya, with SIDBI Chairman and Managing Director Manoj Mittal and senior officials from DFS, SIDBI and NABARD present.
A pilot of the arrangement had already been run across three Regional Rural Banks, and its results were described as encouraging - the basis on which the roll-out to more RRBs was proposed.
The lending runs on SIDBI's Co-Lending Origination Platform, an end-to-end digital system intended to make the credit process faster and paperless.
The target market is MSME borrowers in rural and semi-urban areas, where RRBs have branch reach that SIDBI, as a development finance institution, does not.
In a co-lending arrangement two lenders fund a single loan to one borrower, sharing the exposure and the risk between them under a pre-agreed split. The point is that each partner supplies what the other lacks. A development finance institution such as SIDBI has capital, lower funding costs and specialist MSME underwriting, but almost no retail branch presence in a village. A Regional Rural Bank has the branches, the local knowledge and the customer relationships, but a smaller balance sheet and limits on how much single-sector exposure it can carry. Pairing them lets a rural MSME borrow at a rate and ticket size neither lender would have reached alone. Running the origination on a shared digital platform matters because the coordination cost - two lenders, one file, one borrower - is exactly what has historically made co-lending slow.
Simple Analogy: It is co-financing the way two banks jointly fund a large project, scaled down to a single small workshop's loan - one partner brings the money, the other brings the doorstep.
Principal financial institution for the promotion, financing and development of the MSME sector and for coordinating the institutions engaged in similar activities; also administers the Small Industries Development Fund and the National Equity Fund, both earlier run by IDBI
Banks set up under the Regional Rural Banks Act, 1976 to serve rural credit needs; jointly owned by the Central Government, a sponsor public sector bank and the State Government in a 50:35:15 ratio
Department of the Ministry of Finance that administers public sector banks, insurers and development finance institutions; chaired this conclave
Apex development bank for agriculture and rural development; supervises RRBs and cooperative banks and was represented at the conclave
General Awareness > Banking and Financial Institutions; Development Finance; Priority Sector and MSME credit
General Awareness > Indian Economy and Banking
GS Paper III > Indian Economy - inclusive growth, mobilisation of resources, MSME sector
General Awareness > Economy and Banking
The Service Area Approach was implemented under the purview of
Answer: Lead Bank Scheme
An arrangement in which two lenders jointly fund a single loan to one borrower under a pre-agreed sharing of exposure and risk
Small Industries Development Bank of India - the principal financial institution for promotion, financing and development of the MSME sector; established 2 April 1990, headquartered in Lucknow
A bank established under the RRB Act, 1976, owned 50:35:15 by the Centre, a sponsor bank and the State Government, to serve rural credit needs
The fourth phase of RRB consolidation, effective 1 May 2025, which amalgamated 26 RRBs and reduced the national count from 43 to 28
Lending by an apex institution to banks and NBFCs so that they can on-lend to end borrowers - SIDBI's principal indirect finance channel