Small business credit hits ₹46 lakh crore with surge in first-time borrowers
The CRIF–SIDBI Small Business Spotlight Report reveals significant growth in India's small business credit market, reaching ₹46 lakh crore with a 16.2% year-on-year increase. The growth is driven by a rise in first-time borrowers (23.3%) and expanding NBFC participation. Active loan accounts grew by 11.8% to 7.30 crore. Sole proprietors dominate the market, accounting for 80% of credit exposure. Working capital loans constitute 57% of enterprise credit, while loans against property are prominent for sole proprietors. Unsecured lending saw a sharp 31% growth. The market is expanding beyond major urban centers, with improved asset quality trends.
*this image is generated using AI for illustrative purposes only.
India's small business credit market reached ₹46 lakh crore with 16.2% year-on-year growth, driven by a significant increase in first-time borrowers and expanding NBFC participation across segments, according to the latest CRIF–SIDBI Small Business Spotlight Report.
Growing Participation from New Borrowers
The report highlights a notable trend towards market formalization, with 23.3% of small business borrowers being new to credit and 12% borrowing for an enterprise for the first time. This influx of new participants has contributed to substantial growth in active loan accounts, which rose 11.8% to reach 7.30 crore.
| Metric | Value | Growth Rate |
|---|---|---|
| Total Credit Exposure | ₹46 lakh crore | +16.2% YoY |
| Active Loan Accounts | 7.30 crore | +11.8% YoY |
| First-time Borrowers | 23.3% of total | - |
| Enterprise First-timers | 12% of total | - |
Market Structure and Segment Performance
Sole proprietors continue to anchor the small business credit ecosystem, accounting for nearly 80% of total credit exposure and close to 90% of all borrowers. The fastest growth is emerging among sole proprietors with a formal enterprise footprint, where credit exposure expanded 20% year-on-year.
NBFCs have significantly strengthened their role among sole proprietors, now accounting for over 41% of lending in this segment, reflecting their expanding reach into smaller and under-penetrated markets.
Credit Structure and Product Mix
Working capital loans constitute nearly 57% of enterprise credit outstanding, highlighting ongoing liquidity requirements for formal businesses. Among sole proprietors, loans against property dominate the portfolio, followed by business loans and commercial vehicle financing.
| Segment | Primary Products | Key Trends |
|---|---|---|
| Enterprises | Working Capital (57%) | Liquidity focus |
| Sole Proprietors | Loans Against Property | Asset-backed shift |
| Overall Market | Unsecured Lending | +31% YoY growth |
Unsecured lending experienced particularly sharp growth of 31% year-on-year, even as lenders maintained overall portfolio discipline and risk management practices.
Geographic Expansion and Asset Quality
Credit distribution continues to expand beyond major urban centers, with Maharashtra, Tamil Nadu, Uttar Pradesh, and Gujarat leading in overall portfolio size. Faster growth rates are emerging in states such as Telangana, Andhra Pradesh, and West Bengal.
Asset quality trends support the positive growth trajectory. Loans overdue by 91 to 180 days declined to approximately 1.40%, down from 1.70% two years earlier. The share of very low-risk and low-risk borrowers increased across both enterprises and sole proprietors.
Odisha exemplifies this balanced growth approach, with small business credit expanding 17.2% year-on-year to ₹96,000 crore, exceeding the national average. Credit growth in the state's aspirational districts crossed 22% while coinciding with improving delinquency trends, demonstrating successful credit expansion into newer regions without materially weakening overall risk profiles.
Historical Stock Returns for IDBI Bank
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.16% | +3.46% | -0.41% | +6.38% | +32.42% | +218.28% |
20
