MSME Pulse Report May 2025 Highlights: Credit Landscape Shows Resilient Growth Amid Slight Softening in Supply

Mumbai, 23 May 2025: The latest MSME Pulse report, jointly published by SIDBI and TransUnion CIBIL, offers a comprehensive view of India’s MSME credit environment for the quarter ending March 2025. The findings reveal a sector that is steadily recovering, with robust credit demand balanced by a modest moderation in loan disbursements.

Key Financial and Credit Trends

Source: TransUnion CIBIL, SIDBI

Sectoral and Regional Insights

The MSME credit ecosystem continues to be led by five key states Maharashtra, Gujarat, Tamil Nadu, Uttar Pradesh, and Delhi — which together account for 48% of total MSME loan originations.

• Sectoral Growth: Manufacturing remains the largest contributor to loan originations by value, underscoring its central role in the MSME sector. Meanwhile, the trade sector has seen the highest share of new-to-credit (NTC) borrowers, especially in Uttar Pradesh, highlighting growing financial inclusion in this segment.
• Lender Landscape: Private banks continue to dominate lending volumes and values for borrowers deemed low-risk. Public sector banks (PSBs), meanwhile, have strengthened their position in trade-sector financing, reflecting a strategic focus on this vital industry segment.

Portfolio Performance and Asset Quality

• The outstanding MSME credit portfolio expanded to ₹35.2 lakh crore, marking a strong 13% growth year-on-year.
• Asset quality has notably improved, with the delinquency rate falling to a five-year low of 1.79%. This trend reflects more disciplined credit behaviour among borrowers and the increasing adoption of risk-based underwriting by lenders.
• Private banks showcased the best asset quality, maintaining a delinquency rate of 1.2%, compared to 2.1% for PSBs.

Momentum in New-to-Credit Borrowers

• New-to-credit borrowers accounted for 47% of all loan originations in the January to March 2025 period.
• Loans under ₹10 lakh saw significant growth, supported by targeted government initiatives designed to boost financial access for smaller enterprises.
• Public sector undertakings led this push, commanding a 60% share in new-to-credit borrower lending.

CGTMSE Milestones in FY25

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) achieved record-breaking milestones during FY25:

• Guarantee coverage soared to ₹3.06 lakh crore, a 51% increase year-on-year.
• Over 27 lakh MSMEs benefited from the scheme.
• Policy enhancements included raising the guarantee limit to ₹10 crore, reducing fees for loans above ₹1 crore, and increasing 90% coverage for women-led enterprises.
• The process for guarantees and claims has been streamlined through automation, further enhancing efficiency.

Strategic Outlook

SIDBI CMD Manoj Mittal and TransUnion CIBIL MD Bhavesh Jain emphasise the critical role of sustained MSME lending, improved borrower profiling, and sector formalisation in shaping a “Viksit Bharat” (Developed India). The report urges lenders to adopt a holistic approach to borrower assessment by integrating consumer and commercial data, a practice shown to improve loan performance by up to 40%.

Final Words 

India’s MSME sector remains a vital engine of economic growth. The May 2025 MSME Pulse report highlights the sector’s resilience, supported by improving credit demand, better asset quality, and impactful government-backed guarantee schemes. As lenders continue to leverage data-driven underwriting and maintain disciplined portfolio management, the foundation is set for sustainable and inclusive credit expansion.

Disclaimer: This content is only for informational purpose. It does not make any recommendation to act or invest. Please read the offer documents carefully before investing. Investments are subject to market risks and other risks. There is no guarantee of the actual returns that will be given.

REF: https://www.sidbi.in/head/uploads/msmepluse_documents/MSME_Pulse_Report_May_2025_Digital_Version_compressed.pdf