MSME Credit – Government Schemes Expand Financing Support for UP Artisans
MSME Credit –Uttar Pradesh’s micro, small and medium enterprises (MSMEs) and traditional artisans are set to continue receiving support through government credit and guarantee programmes designed to improve access to finance. The measures focus on collateral-free lending, working capital support and assistance aimed at improving the competitiveness of handicraft businesses, including traditional brass, horn and other craft industries in western Uttar Pradesh.
Government Highlights Credit Initiatives
In a written reply to a Lok Sabha question on Monday, the Finance Ministry said several programmes are already being implemented to strengthen the flow of institutional credit to MSMEs across the country. The initiatives also cover handicraft businesses and artisans operating in western parts of Uttar Pradesh.
One of the major schemes is the Pradhan Mantri Mudra Yojana (PMMY), which provides eligible micro enterprises with collateral-free loans of up to Rs 20 lakh. According to the government, 6.02 crore loans worth Rs 4.13 lakh crore had been sanctioned in Uttar Pradesh under the scheme since its launch, as of June 26, 2026.
Women entrepreneurs and beneficiaries have received a significant share of this funding. Loans amounting to Rs 1.48 lakh crore, representing 36 per cent of the total disbursements in the state, went to women beneficiaries.
PM Vishwakarma Supports Traditional Trades
The government has also pointed to the PM Vishwakarma Scheme as an important source of financial and business support for traditional artisans and craftspeople. The programme covers 18 identified trades and provides assistance across different stages of enterprise development, including collateral-free credit.
Under the scheme, eligible beneficiaries can receive enterprise development loans of up to Rs 3 lakh in two stages. The loans are offered at a concessional interest rate of 5 per cent, while the government provides an 8 per cent interest subvention.
In Uttar Pradesh, Rs 129 crore had been disbursed to 15,304 beneficiaries under PM Vishwakarma, according to the figures cited by the government.
Handicraft Programmes Focus on Growth
Beyond direct credit, the Ministry of Textiles is implementing programmes aimed at strengthening the wider handicrafts ecosystem. The National Handicrafts Development Programme (NHDP) and the Comprehensive Handicrafts Cluster Development Scheme (CHCDS) provide assistance for skill development, infrastructure, cluster development, technology adoption, digitisation, branding and marketing.
During financial year 2025-26, Rs 29.12 crore was sanctioned under NHDP in Uttar Pradesh. The allocation benefited 10,616 artisans across the state. Under CHCDS, another Rs 6.25 crore was sanctioned, covering 1,510 artisans.
These programmes are intended to address not only financing needs but also areas such as production capabilities, technology, market access and the overall development of handicraft clusters.
Credit Guarantees Strengthen Lending Access
The Credit Guarantee Scheme for Micro and Small Enterprises is another mechanism being used to facilitate collateral-free borrowing. As of July 31, 2026, more than 21 lakh guarantees valued at Rs 1.58 lakh crore had been issued in Uttar Pradesh.
The guarantee support is aimed at helping eligible micro and small businesses secure institutional finance without relying on traditional collateral requirements.
ECLGS 5.0 Adds Working Capital Support
The government has also introduced ECLGS 5.0, which was launched in May 2026. Under the programme, eligible MSMEs can receive additional credit of up to 20 per cent of their peak fund-based working capital outstanding during the fourth quarter of financial year 2025-26.
In Uttar Pradesh, Rs 13,139 crore had been disbursed to 55,824 MSMEs under the scheme as of August 5, 2026.
Together, the figures indicate that multiple credit, guarantee and development programmes are being used to support MSMEs and traditional artisans in Uttar Pradesh, with particular emphasis on easier financing and the broader development of handicraft enterprises.