New Delhi, May 23 (KNN) India’s Micro, Small and Medium Enterprises (MSMEs) sector recorded notable credit growth of 13 percent year-on-year, with total commercial credit exposure reaching Rs 35.2 lakh crore by March 2025, compared to Rs 31 lakh crore in the previous year.
The expansion was primarily attributed to increased credit supply to existing borrowers within the sector, which encompasses enterprises with credit exposures up to Rs 50 crore.
The sector demonstrated improved financial health, with overall balance-level delinquencies declining to 1.8 percent, marking the lowest level in five years.
This represents a 35 basis point improvement from the 2.1 percent recorded in March 2024.
The delinquency metric measures accounts that are 90 to 720 days past due and classified as sub-standard assets.
According to the joint report released Thursday by TransUnion CIBIL and the Small Industries Development Bank of India (SIDBI), new-to-credit MSME borrowers maintained a significant presence in the lending landscape, comprising 47 percent of total new loan originations as of March 2025.
However, this figure represents a decline from the 51 percent share recorded one year earlier.
Public sector banks emerged as the dominant channel for first-time MSME borrowers, serving 60 percent of new-to-credit customers during the quarter ending March 2025.
The trade sector accounted for the largest proportion of new-to-credit borrowers at 53 percent, while the manufacturing sector exhibited the strongest volume growth at 70 percent year-on-year for this borrower segment.
Despite the manufacturing sector’s robust growth in new borrower acquisition, its share in MSME loan values has declined over the past two years.
The sector has experienced a shift toward professionals and other services, indicating evolving credit distribution patterns within the MSME ecosystem.
Manoj Mittal, Chairman and Managing Director, SIDBI, acknowledged the sector’s progress while highlighting persistent challenges.
He noted that although credit flow to the MSME sector has improved over the years, a significant addressable credit gap remains.
This observation underscores ongoing financing constraints that continue to affect enterprise growth and development within the sector.
Bhavesh Jain, Managing Director and CEO, TransUnion CIBIL, emphasised the critical importance of formal credit access and debt management guidance for sustainable MSME growth.
He highlighted the sector’s particular vulnerability to business cycle fluctuations, noting that these enterprises often lack the financial reserves or institutional support necessary to navigate adverse economic conditions effectively.
(KNN Bureau)
