India's small business credit portfolio grows 13.4 pc to Rs 49.2 lakh crore in FY26
Mumbai, July 13
India's small business credit ecosystem continues to expand steadily despite external headwinds as total portfolio outstanding stood at Rs 49.2 lakh crore till March 2026, a report said on Monday.
This was a robust growth of 13.4 per cent year-on-year, according to credit bureau CRIF High Mark's 4th edition of CRIF-SIDBI Small Business Spotlight Report.
With this increase, the active loans has reached to 7.5 crore as of March 2026, the report added.
The report further added that sole proprietors i.e. individual business borrowers continue to drive the credit growth of small business loans, accounting for 80 per cent of the portfolio and over 87 per cent of the active loans (inclusive of those with entity presence).
Loan against property (LAP) continues to be the dominant product in the consolidated portfolio with 27.1 per cent share, followed by business loans (24.8 per cent) and working capital products (22.8 per cent).
LAP share grew from 25.5 per cent in March 2025 to 27.1 per cent in March 2026, highlighting the continuing importance of secured credit in the MSME sector.
At the national level, the top 10 states account for 72 per cent of POS, underscoring small credit concentration in some regions.
Andhra Pradesh and Uttar Pradesh led state-wise portfolio growth with 16.5 per cent and 18.5 per cent year-on-year growth share.
The report showed that Tamil Nadu emerged as a mature and resilient small business credit market, with portfolio outstanding rising 11.6 per cent YoY to Rs 4.6 lakh crore, while maintaining improving asset quality.
Enterprise term loan growth moderated to 4.7 per cent YoY, highlighting opportunities for lenders to finance MSME technology upgradation, sustainability initiatives and capacity expansion.
Manufacturing accounted for 31.3 per cent of enterprise term loan share, while services and trading together formed 47.6 per cent, according to the report.
It added that the growth in manufacturing linked enterprise term loans was concentrated in core districts, with Bengaluru, Jaipur, Pune, and Rajkot driving key growth and trends.
— IANS
Reader Comments
Interesting that LAP is still dominant. Many small business owners in our family use property as collateral because banks don't trust unsecured loans. The 80% sole proprietor share shows how many are still informal—hope more formalization happens with these loans. 🤔
Good growth numbers. But I'm concerned that top 10 states account for 72% of the portfolio—what about smaller states like Bihar and Jharkhand? They need focused credit access too. Decentralized banking could help.
Mera chota business loan mila tha last year, bahut madad hui. But processing fees and interest rates are still high for smaller borrowers. Government should ensure more transparency and lower costs. Still, 13.4% growth is a positive sign for aatmanirbhar Bharat! 🇮🇳
Interesting that manufacturing concentration is in core districts like Bengaluru and Pune. That makes sense with the industrial hubs. The 4.7% enterprise term loan growth seems low—maybe more needs to be done for technology upgrade financing. Green loans could be a nice niche!
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