Delinquency levels in the MSME sector fall to 1.79% in March 2025 as credit rises 13% YoY to ₹35.2 trillion, with private banks showing the best performing loan book
Among lenders, private banks hold the best performing portfolio with only 1.2 per cent delinquency, while public sector banks stand at 2.1 per cent as of March 2025.
Overall balance-level delinquencies in the micro, small and medium enterprises (MSME) segment fell to a five-year low of 1.79 per cent as of March 2025, down 35 basis points (bps) from last year, even as the commercial credit portfolio for MSMEs rose 13 per cent year-on-year (YoY) to ₹35.2 trillion during this period, according to TransUnion Cibil and Sidbi’s MSME Pulse report.
“The overall balance-level delinquencies (measured as 90 to 720 days past due and reported as ‘Sub-standard’) improved to 1.79 per cent in March 2025, a 35 bps drop compared to March 2024. This improvement has been driven by the borrower segment with ₹50 lakh to ₹50 crore exposure, while the segment with less than ₹50 lakh exposure witnessed a slight deterioration in March 2025 compared to March 2024,” the report said.
Among lenders, private banks hold the best performing portfolio with only 1.2 per cent delinquency, while public sector banks stand at 2.1 per cent as of March 2025.
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Additionally, the report stated that commercial loan demand in the MSME segment grew by 11 per cent YoY in Q4FY25 compared to the same period the previous year. During this quarter, private banks—accounting for 42 per cent of MSME credit demand—saw an 8 per cent YoY increase, while public sector banks, which represent 39 per cent of total credit demand, recorded a 15 per cent YoY growth.
However, commercial credit supply (by value) grew by a modest 3 per cent YoY in FY25, with an 11 per cent YoY decline in Q4FY25, possibly due to higher credit concerns among lenders arising from increased external headwinds.
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