MSME loans’ share doubles aided by public sector banks’ lending: Crisil Intelligence

Crisil Intelligence, in its latest report, has said that the share of loans to micro, small and medium enterprises has nearly doubled during the January to October 2025 period, aided by public sector banks’ (PSBs) lending.

During the period, the share of incremental credit towards MSME loans increased to 32.5% from 17.7% in the year-ago period. Further, the proportion of MSMEs in outstanding credit rose by 1.74%.

However, echoing findings in the Reserve Bank's financial stability report, Crisil has flagged signs of stress in small-ticket, unsecured micro, small and medium enterprises (MSMEs) loans within the overall MSME credit. It noted that PSBs have significant exposures to subprime MSME borrowers.

It highlighted that 12.6% of bank credit is exposed to US tariffs, with over 43% of that exposure contributed by the textiles sector alone. During the period, the share of retail secured credit grew to 31.3% of the incremental credit from 24.5% in the year-ago period.

Crisil noted that share of unsecured retail personal loans in incremental credit decreased to 9.7% in October 2025, compared with 11% in the previous year, in line with the regulatory expectations. Further, the retail unsecured loan growth slowed to 9.8% on-year in October 2025 from 11.7% in October 2024.

Moreover, the share of incremental credit in rural and semi-urban regions combined increased to 26.3% as of September 2025 from 23.7% as of September 2024, amid a recovery in rural demand. Meanwhile, it pointed out that the share of metropolitan areas declined to 51.6% from 56.2% during this period. Besides, Sluggish private capital expenditure led to a contraction in high-ticket industrial loans for banks during the period.