India’s MSME Credit Portfolio Rises 12.5% To Rs 47.4 Lakh Cr, Major Hubs Dominate: CRIF

New Delhi, Sep 22 (KNN) India’s MSME credit market is increasingly concentrated around major industrial and trading hubs, with the MSMEx credit portfolio reaching Rs 47.4 lakh crore as of June 2026, according to CRIF High Mark’s latest MSMEx Spotlight Report.

The portfolio grew 12.5 per cent year-on-year, led by Small and Medium enterprises, whose outstanding credit increased 20.3 per cent and 21.3 per cent, respectively. 

Micro businesses, however, saw limited growth while continuing to dominate loan volumes, accounting for 84.4 per cent of all active loan accounts, reported Economic Times.

Private Banks Lead Cluster Financing

Private sector banks accounted for 41.9 per cent of the outstanding MSMEx portfolio and recorded 13.2 per cent year-on-year growth. They were the leading lender across several major clusters, including Surat, Ahmedabad, Tiruppur and Rajkot.

In Rajkot’s Engineering & Machinery cluster, private banks’ share rose from 45.5 per cent to 57.6 per cent over three years, while their share in Surat’s wholesale trade hub reached 75.9 per cent.

Public sector banks held 31.6 per cent of the portfolio and grew 13.5 per cent. They continued to lead in terms of active loan accounts, with a 41.6 per cent share.

NBFCs Gain Ground In Chemicals

Non-Banking Financial Companies (NBFCs) accounted for 15.6 per cent of MSMEx credit, with their portfolio growing 4.2 per cent year-on-year.

The report noted that NBFCs have strengthened their position in select sectors such as chemicals, particularly in districts including Ahmedabad, Mumbai and Hyderabad, where private-bank credit growth has remained comparatively moderate.

Working Capital Demand Accelerates

Term loans remained the largest component of MSMEx credit, accounting for 51.3 per cent of the outstanding portfolio and growing 13.3 per cent year-on-year.

Working capital-overdraft facilities recorded the fastest growth at 14.6 per cent, indicating rising demand for both long-term financing and working capital among MSMEx borrowers.

Manufacturing Leads Activity Growth

Manufacturing emerged as the fastest-growing major activity, with credit rising 17.4 per cent year-on-year, while trading credit grew 12.7 per cent.

The report highlighted a growing concentration of lender exposure in Wholesale Trade and Engineering & Machinery. High-volume districts accounted for 71.7 per cent and 63.5 per cent, respectively, of their sector portfolios, more than doubling and nearly doubling over three years.

Several major clusters across Engineering & Machinery, Wholesale Trade and Retail Trade also recorded stable or improving portfolio-quality indicators, indicating continued expansion of credit activity in established MSME hubs.

(KNN Bureau)