Mumbai: India’s MSME commercial credit portfolio surged by 13% year-over-year (YoY), reaching ₹35.2 lakh crore as of March 31, 2025, according to the latest MSME Pulse Report released by TransUnion CIBIL and the Small Industries Development Bank of India (SIDBI).
The MSME commercial credit portfolio data marks a strong year for India’s MSME sector, driven by expanding credit supply and improving borrower quality.
In a significant credit quality milestone, the overall balance-level serious delinquency rate – accounts overdue by 90 to 720 days – fell to 1.8%, the lowest level in five years. This decline was led by improved repayment behavior among borrowers with exposure between ₹50 lakh and ₹50 crore.
“The MSME sector remains pivotal to India’s employment and export ecosystem,” said Manoj Mittal, Chairman & MD, SIDBI. “While progress has been made in bridging the credit gap, targeted financial access and capacity building are essential to unlock its full potential.”
MSME commercial credit portfolio: Key Highlights
- Portfolio Growth: MSME credit exposure rose to ₹35.2 lakh crore from ₹31 lakh crore in FY24.
- Delinquency Improvement: Serious delinquencies dropped 35 bps from 2.1% (March 2024) to 1.8% (March 2025).
- New-to-Credit (NTC) Impact: NTC borrowers contributed 47% of new loan originations, reflecting continued financial inclusion, though slightly down from 51% last year.
MSME Commercial Credit Portfolio: Credit Demand and Sector Trends
The commercial credit inquiry volume rose 11% YoY in Q4 FY25, while credit supply by value increased 3% YoY during FY25. However, the Jan–Mar quarter saw an 11% YoY dip in supply due to cautious lending amid economic uncertainty. Despite this, cash credit facilities grew by 7% YoY, indicating resilience in working capital demand.
Public sector banks dominated NTC lending, accounting for 60% of new-to-credit loans. The trade sector represented 53% of NTC borrowers, while the manufacturing sector saw the highest YoY growth (70%) in new borrower additions. Interestingly, while manufacturing contributed to only 23% of new loan volume, it accounted for 34% of loan value—indicating larger ticket sizes.
The share of originations by value in professional services and other sectors rose to 36%, up five percentage points over four years, indicating a broader shift in credit consumption.
Top Lending States in Q4 FY25
The top five states – Maharashtra, Gujarat, Tamil Nadu, Uttar Pradesh, and Delhi – together accounted for 48% of MSME loan originations by value. While manufacturing dominated in most of these states, Uttar Pradesh saw the highest origination in the trade sector.
“Access to formal credit and financial literacy remain critical for sustainable MSME growth,” said Bhavesh Jain, MD & CEO, TransUnion CIBIL. “Tailored support mechanisms can help these businesses withstand economic shocks and improve their long-term viability.”
