Stronger Borrower Profiles and Wider Credit Access Mark MSME Lending Trends, shows CRIF High Mark

Portfolio crosses ₹40 lakh crore; increase in term and unsecured loans reflects changing lender confidence.

Mumbai, 26th June 2025: CRIF High Mark, one of India’s leading credit bureaus, has launched its MSMEx (Micro, Small, and Medium Exposure) Spotlight Report – June’25, offering a comprehensive view of India’s MSME credit landscape. The report captures critical shifts in credit exposure, lender trends, borrower behaviour, and sectoral distribution, highlighting ecosystem evolving towards greater formalization and resilience.

The Mirco, Small and Medium credit exposure stood at ₹40.4 lakh crore as of March 2025, rising 20.1% year-on-year. This growth reflects the combined impact of policy support, digitalisation, and a sustained push for financial inclusion, which has expanded formal credit access across business segments. Micro credit businesses took a lead in loan volume, accounting for nearly 81.1% of all active loans, while small businesses made up the largest share by value, contributing just over 39.9% of the total portfolio.

A noteworthy trend observed is the steady shift towards formal business structures. Among micro credit borrowers, the share of proprietorships – while still dominant- declined from 65% to 62.8% over two years, while the share of private limited firms increased from 5.5% to 7.3%. This change signals an encouraging move toward business formalisation, likely aided by digital onboarding and targeted schemes like Udyam Assist. As of May 2025, over 6.4 crore enterprises were registered on the Udyam and Udyam Assist platforms, with micro businesses forming the vast majority.

On the lending side, public sector banks continue to lead in micro business lending, with 45% market share. In the small and medium business segments, private banks dominate, accounting for about 50% of the outstanding credit. NBFCs have steadily increased their footprint across segments, benefitting from regulatory support that classifies on-lending to small enterprises under priority sector norms.

The report also points to subtle shifts in credit product preferences. Working capital loans remain the most common across borrower segments, making up over half the portfolio. However, the share of term loans has increased for micro borrowers, rising from 37.5% to about 39.7%% over two years, suggesting growing lender confidence. Meanwhile, unsecured business loans have seen a rise from 5.0% to 8.5%, driven in part by digital lending platforms offering small-ticket loans.

Geographically, growth has been broad-based. Maharashtra leads in credit exposure, with a portfolio of ₹6.2 lakh crore as of March 2025, followed by Gujarat, Tamil Nadu, and Uttar Pradesh. All major states recorded double-digit growth, and most showed stable or improving asset quality. Tamil Nadu, for instance, saw its delinquency in the 91–180 days bucket improve from 2.4% to 2.0% over the year.

Commenting on the findings, Sachin Seth, Chairman CRIF High Mark and Regional MD, India & South Asia, CRIF said: “Micro businesses continue to drive India’s credit economy, accounting for 174 lakh active loans as of March 2025. Their total credit exposure has grown by 19.7% year-on-year to ₹10.8 lakh crore. This momentum has been driven by lender confidence, expanding digital infrastructure, and focused government initiatives that are helping bring more businesses into the formal fold. We are seeing a gradual shift toward more formal entities and increased adoption of unsecured credit, particularly through digital channels. This points to a segment that is expanding in both scale and credit maturity.”

The MSMEx Spotlight is CRIF High Mark’s flagship publication on India’s MSME Credit Exposure landscape. Built on granular credit bureau data, it offers valuable insights for lenders, regulators, and policymakers to track sector health, understand borrower shifts, and support responsible credit expansion.