India’s small-business credit ecosystem has expanded, reaching a portfolio outstanding of Rs 49.2 lakh crore as of March 2026, growing by 13.4% year-on-year. The report from CRIF High Mark highlighted that quarter-on-quarter growth was nearly 3%, with active loans reaching 7.5 crore.
Sole proprietors have been the key drivers of this growth, constituting almost 80% of the portfolio and over 87% of active loans. The small business credit ecosystem in India has shown steady growth through March 2026, supported by favorable macroeconomic and policy conditions.
Loan Against Property (LAP) emerged as the largest product category, representing 27.1% of the consolidated portfolio outstanding, followed by business loans at 24.8% and working capital products at 22.8%. LAP’s share increased from 25.5% in March 2025 to 27.1% in March 2026, emphasizing the significance of secured credit in the MSME sector.
The top ten states accounted for 72% of the overall portfolio outstanding, with notable growth seen in Andhra Pradesh and Uttar Pradesh. Andhra Pradesh recorded year-on-year growth of 16.5% and quarter-on-quarter growth of 5.6%, while Uttar Pradesh posted year-on-year growth of 18.5% and quarter-on-quarter growth of 4.5%.
Locations outside the top 100 cities performed well, showing a Compound Annual Growth Rate (CAGR) of 21.6% from 2023 to 2026. Asset quality also improved, with the portfolio at risk for over 90 days decreasing to 4% in March 2026 from 4.2% a year earlier.
The report specifically highlighted Tamil Nadu as a mature and resilient credit market, accounting for around 10% of India’s small business portfolio outstanding and 9% of active loans. In Tamil Nadu, the portfolio outstanding reached Rs 4.6 lakh crore, marking an 11.6% year-on-year increase, while active loans grew by 0.5% year-on-year, signaling a shift towards higher-ticket-size lending.
