CRIF–SIDBI Report Highlights MSME Credit Growth Across States

CRIF High Mark and SIDBI have released the second edition of the CRIF–SIDBI Small Business Spotlight Report (December 2025). The report looks at small businesses with credit exposure of up to ₹5 crore. These businesses play a vital role in financial inclusion, job creation, and balanced economic growth.

The report shows a resilient and steadily strengthening small business credit environment. Credit portfolios continue to expand. Formalisation is progressing gradually. More lenders are participating actively. Asset quality remains healthy.

Aggregate small business credit exposure has reached ₹46 lakh crore. This marks a year-on-year growth of 16.2 percent. Active loan accounts have grown by 11.8 percent to 7.3 crore. Policy support and multiple government credit schemes for MSMEs have helped sustain this momentum.

Sole proprietors continue to dominate the credit ecosystem. They account for around 80 percent of total credit and nearly 90 percent of borrowers. The fastest-growing segment is sole proprietors with an entity presence. This segment has grown by 20 percent year-on-year, led largely by loans against property. As of September 2025, 23.3 percent of borrowers were new to credit and 12 percent were new to enterprise borrowing. This points to increasing formalisation.

Private banks continue to lead enterprise lending, closely followed by public sector banks. NBFCs are steadily increasing their presence, especially among sole proprietors. They now account for more than 41 percent of lending in this segment.

For enterprises, working capital loans dominate and account for nearly 57 percent of outstanding credit. Term loans continue to support capital expenditure. Among sole proprietors, loans against property remain the largest category, followed by business loans and commercial vehicle loans. Unsecured lending has grown by 31 percent year-on-year, even amid concerns around stress.

Maharashtra, Tamil Nadu, Uttar Pradesh, and Gujarat lead in overall portfolio size. Telangana, Andhra Pradesh, and West Bengal show strong growth momentum. Credit penetration beyond the top 100 locations is rising, particularly in Uttar Pradesh, Madhya Pradesh, Karnataka, and Tamil Nadu. Manufacturing continues to lead in absolute credit exposure, while the services sector recorded a growth of 19.6 percent year-on-year.

Portfolio quality has improved across segments. Loans overdue by 91 to 180 days declined to around 1.4 percent as of September 2025, from 1.7 percent in September 2023. Enterprises continue to show lower risk profiles. Sole proprietors have also seen steady improvement. The share of very low and low-risk borrowers increased between September 2023 and September 2025, supported by better underwriting practices and wider use of digital data.

The report also highlights Odisha as a focused state. Small business credit in the state grew from ₹0.67 lakh crore in September 2023 to ₹0.96 lakh crore in September 2025. This represents a year-on-year growth of 17.2 percent, higher than the national average. Credit growth in aspirational districts exceeded 22 percent and showed better delinquency trends. Public sector banks hold more than 40 percent share in the state, while NBFCs are expanding rapidly in under-penetrated regions. The risk profile has improved significantly. The share of very low-risk small enterprises rose from 40.1 percent in September 2023 to 47.1 percent in September 2025, opening up further lending opportunities.

Sachin Seth, Chairman, CRIF High Mark and Regional Managing Director – CRIF India and South Asia said, “Sole proprietors continue to anchor India’s small business credit ecosystem, accounting for close to 80 percent of the borrower base as of September 2025. At the same time, borrowers with both individual and enterprise credit presence are contributing a steadily rising share of overall credit exposure, and this segment has recorded the strongest growth in exposure over the year. Together, these trends indicate that credit deepening and gradual formalisation are progressing in parallel as small businesses scale.”