Aggregate small-business credit exposure in India has reached Rs 46 lakh crore, marking a 16.2% year-on-year increase, according to a report by CRIF High Mark and SIDBI. The report highlights that active loan accounts have grown by 11.8% to 7.3 crore, benefiting from policy measures and government credit schemes for micro, small, and medium enterprises. Formalization among businesses with credit exposure up to Rs 5 crore is progressing, with 23.3% of borrowers being new to credit and 12% new to enterprise borrowing as of September 2025.
The small business credit environment in India is depicted as resilient and steadily strengthening, with expanding credit portfolios and gradual formalization. Sole proprietors remain dominant, constituting about 80% of credit and nearly 90% of borrowers. Private banks lead enterprise lending, closely followed by public sector banks, while NBFCs are increasingly active, particularly among sole proprietors, accounting for over 41% of lending in this segment.
Working capital loans make up nearly 57% of outstanding credit, with term loans supporting capital expenditure. Among sole proprietors, loans against property are the largest category, followed by business loans and commercial vehicle loans. Unsecured lending has seen a 31% year-on-year growth, despite concerns about stress in the sector.
According to Sachin Seth, Chairman of CRIF High Mark and Regional Managing Director of CRIF India and South Asia, sole proprietors play a crucial role in India’s small business credit ecosystem, representing close to 80% of the borrower base as of September 2025. Maharashtra, Tamil Nadu, Uttar Pradesh, and Gujarat lead in overall portfolio size, while Telangana, Andhra Pradesh, and West Bengal show strong growth momentum. The manufacturing sector continues to lead in absolute credit exposure, with the services sector recording a 19.6% year-on-year growth.
