CRIF–SIDBI Study Reveals Increased Penetration Beyond Metropolitan Areas Alongside Improved Portfolio Quality
Mumbai: CRIF High Mark and SIDBI have launched the inaugural CRIF–SIDBI Small Businesses Report 2025. This report offers an exceptional and thorough perspective on India’s small business credit landscape, including not only enterprises but also individual proprietors. It highlights national trends in growth, regional and sectoral distribution, lending behaviors, portfolio quality, and emerging risks.
Key Takeaways
- Strong Credit Growth: As of June ’25, the total outstanding portfolio for Micro, Small, and Medium Enterprise (MSMEx) businesses reported to the commercial bureau with credit exposure upto ₹50 crores[1] stood at ₹36.8 lakh crore[2], reflecting a CAGR of 21.8% between June ’21 and June ’25.
- Segment dynamics: Sole proprietors (with and without entity presence) account for more than 75% of outstanding small business credit and over 85% of active loans. Enterprises recorded the fastest portfolio growth at 24.7% YoY.
- Lender landscape: Private banks hold the largest market share (value) in lending to enterprises (34.4% POS), while NBFCs dominate lending to sole proprietors (42.4% Principal Out standing) and are steadily expanding across all borrower types. PSU banks remain leaders in sub-₹10 lakh exposures but have seen an aggregate market share decline.
- Exposure size and product mix: Exposure band up to ₹10 lakh make up 72.5% of active loans but only 17.8 of outstanding value. Business Loans and Loan Against Property together account for half of all lending, with LAP showing the strongest growth.
- Sector trends: The services sector’s share of exposure among small enterprises rose from 25.6% to 27.8% between June’23 and June’25, overtaking manufacturing, which grew at 21% YoY. The trade sector saw a modest decline in share.
- Portfolio quality: National PAR 91–180 improved from 1.8% to 1.5% between June 2023 and June 2025. The share of very-low-risk borrowers rose from 46.5% to 54.2% for enterprises and from 34.7% to 40.0% for sole proprietors during this period.
Top 10 states posted robust year-on-year growth in small business credit between June 2024 and June 2025, led by Uttar Pradesh at 20.7%, followed by Telangana (19.7%) and Rajasthan (18.6%). Maharashtra remains the largest market with ₹6.0 lakh crore in outstanding credit, while Tamil Nadu, Gujarat, Uttar Pradesh, and Karnataka round out the top five by portfolio size. Uttar Pradesh’s small business portfolio grew 20.7% YoY to ₹3.6 lakh crore, outpacing the national average. Industrial clusters such as Gautam Buddha Nagar (33% YoY) and Ghaziabad. (23.4% YoY) posted strong growth across diverse sectors. Portfolio quality improved, with PAR 91–180 falling from 2.0% in June 2023 to 1.5% in June 2025. Aspirational district contributed 4.1% of the state’s exposure and grew 17.4% YoY, with Shrawasti leading at 29.6%.
Rural and semi-urban regions are steadily gaining share, signalling deeper geographic penetration and broader financial inclusion in small business lending.
Sachin Seth, Chairman, CRIF High Mark; Regional Managing Director – CRIF India and South Asia said“Small businesses are a vital pillar of India’s economy, and this study in partnership with SIDBI offers a clear, data-backed view of how the segment is expanding and evolving.” He further adds “Notably, the share of very-low-risk borrowers has risen sharply over the past two years, reaching 54.2% for enterprises and 40.0% for sole proprietors, reflecting stronger credit practices and deeper formalization. With more very-low-risk borrowers and deeper penetration into rural and semi-urban areas, we see a more resilient and formalised credit ecosystem emerging”.
