India’s micro, small and medium enterprise credit market is increasingly centred around major industrial and trading centres, with private banks leading the growth as firms pursue both long-term and day-to-day financing. The sector’s outstanding loans have reached Rs 47.4 lakh crore, highlighting regional and sectoral shifts in borrowing behaviour.
India’s micro, small and medium enterprise credit market has become more concentrated in established industrial and trading centres, with outstanding lending rising to Rs 47.4 lakh crore by June 2026, according to CRIF High Mark’s latest MSMEx Spotlight report. The data, as reported by Economic Times and Business Standard, shows the portfolio expanded 12.5 per cent from a year earlier, led by small and medium enterprises, while micro borrowers continued to account for the bulk of loan accounts.
CRIF High Mark said private sector banks were the main force behind this expansion, holding 41.9 per cent of the outstanding portfolio and growing 13.2 per cent year on year. They were the leading lenders in several major hubs, including Surat, Ahmedabad, Tiruppur and Rajkot. Economic Times also reported that banks as a group accounted for 73.5 per cent of MSME credit, underlining the dominance of the formal banking system over non-bank lenders.
Public sector banks held 31.6 per cent of outstanding MSME credit and recorded 13.5 per cent growth, while non-banking financial companies accounted for 15.6 per cent and expanded more slowly at 4.2 per cent. The report said non-bank lenders have been relatively stronger in select sectors such as chemicals, especially in districts including Ahmedabad, Mumbai and Hyderabad, where private bank growth has been more subdued.
The report also pointed to a clear shift in the type of borrowing. Term loans remained the largest share of the market at 51.3 per cent, but working capital overdrafts grew fastest at 14.6 per cent, suggesting firms are seeking both long-term investment and day-to-day liquidity. Manufacturing was the fastest-growing major activity, with credit rising 17.4 per cent, while trading loans grew 12.7 per cent. Business Standard said high-volume districts now account for 71.7 per cent of wholesale trade exposure and 63.5 per cent in engineering and machinery, highlighting how strongly credit is clustering around established business hubs.
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