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India's Small Business Credit Soars 16% to Rs 46 Lakh Crore, Fueled by Policy Push

India's aggregate credit exposure to small businesses surged 16.2% year-on-year to reach Rs 46 lakh crore, supported by government policy measures. The number of active loan accounts grew to 7.3 crore, with formalisation advancing as nearly a quarter of borrowers were new to credit. Sole proprietorships, accounting for 80% of credit, were the fastest-growing segment at 20%, largely driven by loans against property. The report highlights a resilient credit environment with private banks leading, NBFCs gaining share, and states like Maharashtra and Tamil Nadu leading in portfolio size.

Key Points: India's Small Business Credit Hits Rs 46 Lakh Crore, Up 16%

  • Credit exposure hits Rs 46 lakh crore
  • 7.3 crore active loan accounts
  • Sole proprietors drive 20% growth
  • Formalisation advances with new borrowers
2 min read

Small business credit rise 16 pc to Rs 46 lakh crore driven by policy measures

India's small business credit exposure surged 16.2% to Rs 46 lakh crore, with 7.3 crore active loan accounts. Driven by policy measures, formalisation advances.

"Sole proprietors continue to anchor India's small business credit ecosystem, accounting for close to 80 percent of the borrower base. - Sachin Seth, CRIF High Mark"

New Delhi, Dec 26

Aggregate small‑business credit exposure in India reached Rs 46 lakh crore, up 16.2 per cent year‑on‑year, a report said on Friday.

The report from CRIF High Mark and SIDBI said that active loan accounts grew 11.8 per cent to 7.3 crore, supported by policy measures and government credit schemes for micro, small and medium enterprises.

Among businesses with credit exposure up to Rs 5 crore, the report found that formalisation was advancing with 23.3 per cent of borrowers new to credit and 12 per cent new to enterprise borrowing as of September 2025.

The report showed a resilient and steadily strengthening small business credit environment. Credit portfolios continue to expand and formalisation is progressing gradually, with more lenders participating actively, while asset quality remains healthy.

Sole proprietors continued to dominate the system, accounting for around 80 per cent of credit and nearly 90 per cent of borrowers. The fastest growing segment--sole proprietors posted the fastest growth at 20 per cent, driven largely by loans against property.

"Private banks continue to lead enterprise lending, closely followed by public sector banks. NBFCs are steadily increasing their presence, especially among sole proprietors. They now account for more than 41 percent of lending in this segment," the report noted.

Working capital loans accounted for nearly 57 per cent of outstanding credit, while term loans continue to support capital expenditure.

Among sole proprietors, loans against property remain the largest category, followed by business loans and commercial vehicle loans. Unsecured lending has grown by 31 percent year-on-year, even amid concerns around stress, it said.

"Sole proprietors continue to anchor India's small business credit ecosystem, accounting for close to 80 percent of the borrower base as of September 2025...Credit deepening and gradual formalisation are progressing in parallel as small businesses scale," said Sachin Seth, Chairman, CRIF High Mark and Regional Managing Director - CRIF India and South Asia.

Maharashtra, Tamil Nadu, Uttar Pradesh, and Gujarat lead in overall portfolio size. Telangana, Andhra Pradesh, and West Bengal show strong growth momentum. Manufacturing continues to lead in absolute credit exposure, while the services sector recorded a growth of 19.6 percent year-on-year.

- IANS

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Reader Comments

P
Priya S
Good to see formalisation progressing. 23% new to credit is a big number. But I hope banks are also providing financial literacy, not just loans. Unsecured lending growing at 31% is a bit worrying if not managed properly.
R
Rohit P
Sole proprietors are the backbone! 80% of credit and 90% of borrowers - that's the real story of India's economy. The kirana store owner, the tailor, the electrician. Loans against property helping them grow is a positive sign.
S
Sarah B
Interesting to see NBFCs capturing 41% of the sole proprietor segment. They are often more agile than big banks. Hope this competition brings better service and rates for small business owners across the country.
K
Karthik V
The regional breakdown is key. Maharashtra, TN, UP, Gujarat leading is expected, but strong growth in Telangana, AP, WB shows development is spreading. Need to focus on the North-East and central states next.
M
Michael C
While the numbers look great, I hope the "healthy asset quality" holds. Rapid growth in unsecured lending can be a double-edged sword. Banks and NBFCs must ensure responsible lending practices are followed.

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