MSME Loan Portfolio Grows to Rs 46 Lakh Crore Despite Global Challenges
India's micro, small and medium enterprises (MSME) loan portfolio has reached nearly Rs 46 lakh crore in April 2026, reflecting a robust 12.8 per cent year-over-year growth, according to a survey by CRIF High Mark. The growth was driven by strong domestic demand, policy changes, and improving asset quality, even as geopolitical instability began to weigh on the sector.
Growth Slows in Recent Months
Despite the overall expansion, the pace of growth has decelerated in recent months. Portfolio growth slowed to 3.1 per cent between December 2025 and April 2026, compared to 9.7 per cent during the same period the previous year. Active loans also declined by 3.5 per cent, reversing a 3 per cent increase in the same period last year. These trends indicate the early impact of global uncertainty on MSME finance, as per the survey.
Manufacturing and Trade Sectors See Credit Slowdown
The survey highlighted that over 60 per cent of the MSME portfolio consists of manufacturing and trade, both of which experienced lower credit momentum. Manufacturing credit growth dropped to 4.3 per cent between December 2025 and March 2026, down from 10.4 per cent the previous year, before declining further to 3.1 per cent in April. Portfolio reductions were reported in manufacturing, shipping and transportation, food processing, automobiles, and related industries, ranging from 14 per cent to 17 per cent.
Early-Stage Delinquencies Rise
Early-stage delinquencies in the MSME sector rose from 1.6 per cent in March to 1.8 per cent in April, indicating increasing stress. Micro enterprises remain the most vulnerable borrower category, with the highest early-stage default rate of 2.7 per cent, compared to 1.5 per cent for small firms and 0.8 per cent for medium-sized organizations. Despite making up nearly 86 per cent of all active loans, micro enterprises saw a 4.6 per cent decline in active loans between December 2025 and March 2026, and their portfolio outstanding decreased by 3.1 per cent. Some stabilization was observed in April, but the sector requires close monitoring, according to CRIF High Mark.
