“Bihar’s government has launched a groundbreaking zero-interest loan scheme for MSMEs, announced on June 27, 2025, to fuel small business growth. Offering up to ₹10 lakh without collateral, the initiative aims to boost entrepreneurship, create jobs, and drive economic development. With streamlined applications via digital platforms, the scheme targets youth and women entrepreneurs to transform Bihar’s MSME landscape.”
Bihar Unleashes Zero-Interest Loan Scheme for MSMEs
On June 27, 2025, the Bihar government unveiled an ambitious zero-interest loan scheme targeting Micro, Small, and Medium Enterprises (MSMEs), a move hailed as a game-changer for the state’s economic landscape. The initiative, launched under the state’s Industrial Development Policy, aims to empower small businesses by providing financial support without the burden of interest, addressing a critical barrier to growth for entrepreneurs.
The scheme offers loans of up to ₹10 lakh to eligible MSMEs, with no collateral required, making it accessible to new and small-scale entrepreneurs. This financial aid is designed to support a range of needs, including purchasing machinery, upgrading technology, expanding operations, and meeting working capital requirements. The government has allocated ₹500 crore for the program in its initial phase, with plans to scale up based on demand.
A key feature of the scheme is its focus on inclusivity. Priority is given to youth, women, and entrepreneurs from marginalized communities, aligning with Bihar’s vision to foster equitable economic growth. The application process has been simplified through an online portal, ensuring transparency and efficiency. Businesses registered under the Udyam Registration platform can apply, with approvals expected within 15 days, a significant improvement over traditional loan processes.
The zero-interest model is supported by a state-backed subsidy, where the government compensates financial institutions for the interest component. This approach draws inspiration from successful central government schemes like the Pradhan Mantri Mudra Yojana (PMMY) but is tailored to Bihar’s unique economic needs. The state has partnered with major banks, including the State Bank of India (SBI) and regional rural banks, to ensure seamless disbursal of funds.
Bihar’s MSME sector, which contributes significantly to the state’s GDP and employs over 1.5 crore people, has long faced challenges such as limited access to credit and high interest rates. The new scheme is expected to address these hurdles, enabling businesses to scale up, adopt modern technologies, and compete in larger markets. The government projects that the initiative will create over 50,000 jobs in the next two years, particularly in rural and semi-urban areas.
Industry experts have praised the scheme’s potential to transform Bihar’s entrepreneurial ecosystem. “This is a bold step toward making Bihar a hub for MSMEs,” said Anil Sharma, a Patna-based economist. “By removing the interest burden, the government is not only encouraging new ventures but also ensuring the survival of existing ones in a competitive market.”
The scheme also includes provisions for skill development and mentorship programs to support first-time entrepreneurs. MSMEs in sectors such as food processing, textiles, and handicrafts—key drivers of Bihar’s economy—are expected to benefit significantly. The government has also introduced a grievance redressal mechanism to address any issues faced during loan disbursal or repayment.
To ensure the scheme’s success, the state is collaborating with the Small Industries Development Bank of India (SIDBI) and the Ministry of MSME to provide technical assistance and monitor progress. Regular audits and impact assessments will be conducted to evaluate the scheme’s effectiveness and make necessary adjustments.
The announcement has already sparked enthusiasm among entrepreneurs. Priya Kumari, a small-scale textile manufacturer in Muzaffarpur, shared her optimism: “This loan will help me upgrade my looms and hire more workers. It’s a lifeline for businesses like mine that struggle with high-interest loans.”
As Bihar aims to position itself as a leader in India’s MSME sector, the zero-interest loan scheme marks a significant step toward inclusive and sustainable economic growth. With its focus on accessibility, digital innovation, and job creation, the initiative could serve as a model for other states to follow.
Disclaimer: This article is based on information available from government announcements, official statements, and industry reports as of June 27, 2025. Readers are advised to verify details with official sources before making financial decisions.