MSME Pulse

The Need Of MSME PULSE

Highlights of MSME Pulse: Dec’2025

The MSME Pulse Report (December 2025) presents a comprehensive assessment of India’s MSME credit ecosystem by integrating commercial lending data with business oriented loans availed by individuals in personal capacity. Aligned with the revised MSME classification and enhanced exposure threshold of up to ₹100 crore, the report offers a more holistic picture of credit flows, borrower behaviour, and portfolio quality.

• Consolidated MSME credit outstanding reached ₹67.6 lakh crore as of December 2025, recording robust 16% YoY growth and a five year CAGR of 17%, with strong traction in secured business loans and property loans.
• Asset quality continued to improve, with balance level serious delinquencies (90–720 DPD) declining to 1.87%, the lowest level in the past five years, reflecting improved underwriting standards and portfolio discipline.
• Formal credit penetration among Udyam registered MSMEs stood at about 47%, with 3.6 crore credit active borrowers out of 7.7 crore registered enterprises, highlighting both meaningful progress and substantial headroom for further financial inclusion.
• Portfolio risk profiles strengthened steadily, with the share of low risk loans rising to 55% in commercial lending and to 25% among individual borrowers with business loans, indicating improved borrower quality across lender categories.
• NBFCs increased their role in MSME credit supply, accounting for 40% of origination volumes and 26% of origination value during the nine months ended December 2025, while private sector banks retained leadership in lending by value.
• Manufacturing remained the backbone of MSME credit with a 38% portfolio share, especially dominating higher ticket size segments, while trade continued to lead in the sub ₹2 crore segment.
• Five manufacturing sub sectors, namely textiles, food processing, engineering, basic metals, and chemicals, accounted for over 60% of manufacturing credit, with cluster level analysis revealing diverse regional growth patterns.
• MSME clusters contributed nearly 46% of manufacturing credit in key sub sectors, with districts such as Surat, Gurugram, Vadodara, Bareilly, and Kancheepuram emerging as high growth or high potential centres, though with pockets of rising delinquencies.
• A significant untapped opportunity exists in re engaging past commercial borrowers, particularly micro enterprises, as nearly one third of borrowers exited commercial credit, and most did not re enter despite many retaining sound credit profiles.