₹45.3 Lakh Cr & Rising: India’s Small Business Credit Boom, 61 Points

1. Importance of Micro Enterprises in India

1. Micro enterprises make up 99% of the MSME sector in India.

2. They are the backbone of employment generation in rural and semi-urban areas.

3. They drive innovation, local entrepreneurship, and self-reliance.

4. Government initiatives focus on formalizing Informal Micro Enterprises (IMEs) to improve loan accessibility and financial inclusion.

2. Small Business Credit Landscape Overview

5. Total MSME outstanding portfolio: ₹36.8 lakh crore (June 2025).

6. Small business credit exposure grew 19.3% YoY to ₹45.3 lakh crore.

7. Active loans increased 8.7% YoY to 6.9 crore.

8. Sole proprietors hold 75%+ of outstanding small business credit.

3. Key Structural Developments

9. 6.6 crore+ enterprises registered on Udyam and other platforms, signaling higher transparency.

10. Digital lending and fintech innovations reduced costs and boosted access to credit.

11. Government-backed schemes post-COVID reinforced credit flows for MSMEs.

4. Borrower Segment Analysis

12. Enterprises witnessed 24.7% YoY growth in portfolio outstanding.

13. Sole proprietors with entity presence account for 45.9% of the total portfolio.

14. Unique borrower base expanded 7.1% YoY, showing rising entrepreneurship.

5. Lender Type Analysis

15. Private Banks hold 34.4% share of small business credit.

16. NBFCs expanded from 21.2% to 28.2%, gaining strong momentum.

17. PSU Banks dominate in sub-₹10 lakh loans but their overall share is shrinking.

6. Exposure Trends in Small Business Loans

18. Loans under ₹10 lakh = 72.5% of active loans, but only 17.8% of portfolio value.

19. Loans in the ₹1–5 crore range are growing, showing a shift toward larger exposures.

7. Product Type Trends

20. Business Loans + Loan Against Property = 50% of the portfolio.

21. Working Capital loans maintain 23% share.

22. Term Loans recovering, reflecting new borrowing patterns.

8. Industry Activity Analysis

23. Services sector leads with 27.8% share (up from 25.6%).

24. Manufacturing grew 21%, despite slight share drop.

9. Geographic Trends in Small Business Credit

25. Uttar Pradesh portfolio grew 20.7% YoY, emerging as a key hub.

26. Maharashtra remains #1 with 13.4% of national portfolio value.

27. Top 5 states = 46% of India’s MSME credit portfolio.

10. Sole Proprietors’ Portfolio Insights

28. Portfolio outstanding: ₹1,435.4K Cr (June 2025).

29. YoY growth: 16.1%.

30. Leading states: Maharashtra (13%), Tamil Nadu (11%), Karnataka (9%).

31. Uttar Pradesh = fastest growth at 21%.

11. District-Level Insights

32. Mumbai (4.4%), Delhi (3.8%), Bengaluru (3%) dominate portfolio share.

33. Jaipur (19.1%) and Ahmedabad (19%) lead in YoY growth.

34. Bengaluru & Hyderabad hold strong state-level credit shares.

12. Rural vs Urban Credit Distribution

35. Urban share dropped to 51.9% (from 54.2%).

36. Rural exposure rose to 29% (from 26.9%).

37. Sole proprietors’ rural lending exposure climbed to 36.8%.

13. Gender & Age Demographics

38. Male borrowers = 78.2% of small business credit.

39. Age 36–45 = 65%+ of total exposure.

40. Borrowers ≤25 years = a small, declining segment.

14. Loan Origination Trends

41. Originations rose 10.5% YoY, from ₹3.8 lakh crore to ₹4.2 lakh crore.

42. Loan volumes declined from 51.7 lakh to 44.9 lakh.

43. Sole proprietors’ business loans fell 18%.

15. Portfolio at Risk (PAR) Trends

44. Overall portfolio quality improved (PAR 91-180 reduced from 1.8% to 1.5%).

45. Enterprises PAR fell from 1.6% to 1.1%.

46. Sole proprietors improved from 2.3% to 1.9%, but remain stressed.

16. Risk Profiles

47. Enterprises’ Very Low Risk borrowers rose to 54.2%.

48. Sole proprietors’ Very Low Risk profiles increased to 40%.

49. Sole proprietors still carry 18.3% Very High Risk, vs enterprises at 6.9%.

17. Uttar Pradesh – Small Business Credit Hub

50. Portfolio rose from ₹3.0 lakh crore to ₹3.6 lakh crore (20.7% YoY).

51. Active loans = 66.7 lakh (9.2% YoY growth).

52. Sole proprietors = 80%+ of UP portfolio.

18. Aspirational Districts in Uttar Pradesh

53. Aspirational districts = 4.1% of UP’s portfolio.

54. Outstanding grew 17.4% YoY (Shrawasti at 29.5%).

55. Higher PAR rates indicate increased stress.

19. Lender Trends in Uttar Pradesh

56. PSU banks dropped from 42.5% to 35.8% share.

57. NBFCs expanded from 19.8% to 28.8%.

58. Private banks stable at 28-29%.

20. Macroeconomic Model & PAR Predictions

59. Sole proprietors’ PAR expected to drop from 1.4% to 1.1% in next 6 months.

60. Key predictors: GDP growth & Industrial Production Index.

61. Model has a 90% confidence level in risk moderation trends.