MSME lending sees robust value, volume growth, delinquencies also increase

The increase in lending to the MSME sector reflects robust credit demand from small businesses as well as improving credit access supported by the increasing digital lending initiatives

Lending to micro, small and medium enterprises (MSMEs) grew by 19.3 per cent year-on-year (Y-o-Y) to Rs 45.3 trillion (as of June 2025) and the number of active loans rose 8.7 per cent Y-o-Y to 6.9 crore during this period. This reflects robust credit demand from small businesses as well as the improving credit access in this segment supported by the increasing digital lending initiatives, according to the CRIF–SIDBI Small Businesses Report 2025. However, delinquency trends moved up in the 91–180 days past-due date (DPD) bucket to 1.5 per cent from 1.4 per cent Y-o-Y. It remained flat at 3.4 per cent in the 30-91 DPD; and improved to 2.9 per cent from 3.2 per cent in the 181-720 DPD. 

Overall small business credit exposure trends

   

It may be recalled that the Reserve Bank of India’s (RBI’s) Financial Stability Report of June 2025 had observed that the share of subprime borrowers in the MSME portfolio of banks had fallen to 23.3 per cent in FY25 from 33.5 per cent in June 2022. But in the 28th round of the RBI’s Systemic Risk Survey conducted in May 2025, around 80 per cent of the respondents’ perceived export-dependent manufacturing sectors - such as textiles, readymade garments, electronics - and MSMEs in the export clusters to face the highest risk due to global trade disruptions. Nearly 40 per cent of respondents assessed the shipping and logistics industry to be the most vulnerable to trade slowdown.