New Delhi, March 7 -- Public sector banks (PSBs) are ramping up collaborations with fintech startups to enhance lending to micro, small, and medium enterprises (MSMEs).

This follows the government's push in the recent budget to accelerate credit flow to the sector and meet priority sector lending targets.

With a slowdown in unsecured consumer lending-where fintech partnerships were most common-banks are now focusing on supply chain finance, loans against property, and term loans for businesses. "MSME and business loans drive greater economic impact than consumer lending.

There's strong regulatory and industry momentum toward PSB-fintech co-lending," said Pallavi Shrivastava, co-founder of supply chain finance startup ProgCap.

Startups...