The MSME sector reported a 13% year-on-year growth in its commercial credit portfolio, reaching Rs 35 lakh crore as of March 31, 2025, according to the TransUnion CIBIL and SIDBI’s MSME Pulse Report.
The portfolio stood at Rs 31 lakh crore in March 2024. The growth was primarily driven by an increased credit supply to existing borrowers, including business loans, loans against property and vehicle advances. The outstanding balance in legacy accounts dipped to Rs 2.6 lakh crore in March 2025, from Rs 2.8 lakh crore in March 2024.
Notably, delinquencies (90-720 days past due) declined to a five-year low of 1.8%, from 2.1% in March 2024, reflecting an improved credit performance. Borrowers with exposures anywhere between Rs 50 lakh and Rs 50 crore led this trend, with delinquencies dropping to 1.8% from 2.1% in March 2024. However, borrowers with exposure of up to Rs 10 lakh saw delinquencies rise to 5.8% from 5.1%, while those with exposure of between Rs 10 lakh and Rs 50 lakh experienced a marginal increase to 2.9% from 2.8%.
The asset quality has been improving across lender categories. However, delinquencies in lower-ticket-size loans are a cause for concern. For loans of up to Rs 10 lakh, the 90-day delinquency rate in the 12 month of business surged to 16.2% in March 2025, from 8.7% in March 2024.
For the quarter ended March 2025, commercial credit demand rose 11% year-over-year, while supply declined 11% due to increased credit concerns. New cash credit facilities remained resilient with a 7% Y-o-Y growth. New-to-credit (NTC) MSME borrowers accounted for 47% of new loan originations, with public sector banks leading at 60%.
The segment for first-time credit seekers witnessed a moderation during the March quarter, but still held a significant share of total originations at 47% to 346,000 borrowers, with a high share of NTC in credit exposure of up to Rs 10 lakh. This is due to targeted government schemes and incentives, especially aimed at micro enterprises.