MSME Formal Credit Grows 20 Pc to Rs 40 Lakh Cr

Micro credit businesses took a lead in loan volume, accounting for nearly 81.1 per cent of all active loans. Micro businesses accounted for 174 lakh active loans with the total credit exposure growing by 19.7 per cent to Rs 10.8 lakh crore, according to CRIF High Mark.

Small businesses made up the largest share by credit value, contributing just over 39.9 per cent of the total portfolio. 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.

Public sector banks continue to lead in micro business lending, with 45 per cent market share. In the small and medium business segments, private banks dominate, accounting for about 50 per cent 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.

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 per cent to about 39.7 per cent over two years, suggesting growing lender confidence. Meanwhile, unsecured business loans have seen a rise from 5 per cent to 8.5 per cent, driven in part by digital lending platforms offering small-ticket loans.

Maharashtra leads in credit exposure, with a portfolio of Rs 6.2 lakh crore as of March 2025, followed by Gujarat, Tamil Nadu, and Uttar Pradesh. All major states recorded double-digit growth in FY25, and most showed stable or improving asset quality.