Non-public Banks Dominate Small Enterprise Lending as PSBs Decline

New Delhi [India], December 25 (ANI): Non-public banks proceed to dominate enterprise lending to small companies in India, intently adopted by public sector banks (PSBs), although the latter have seen a decline of their market share over the previous two years, in accordance with a report by Small Industries Improvement Financial institution of India (SIDBI) and CRIF Excessive Mark, India’s first full-service credit score info bureau.
The report famous that whereas non-public banks stay the first lenders to enterprises, non-banking monetary firms (NBFCs) are steadily gaining share, notably amongst sole proprietors, the place they now command over 41 per cent of the lending share.
Within the examine, “small enterprise” is outlined as enterprises with an aggregated credit score publicity of no more than Rs 5 crore from the formal lending system.
It said, “As of Sep’25, non-public banks stay the first lenders to enterprises, although their share exhibits minor volatility. Public sector banks comply with intently, however their share declined from 39.3 per cent in Sep’23 to 37.8 per cent in Sep’25.”
The report highlighted that the diminished share of PSBs has largely been absorbed by NBFCs, reflecting a gradual shift within the lending panorama.
Combination credit score publicity to small companies reached Rs 46 lakh crore as of September 2025, registering a strong 16.2 per cent year-on-year progress. On a quarter-on-quarter foundation, progress stood at 1.5 per cent. Lively mortgage accounts additionally rose strongly, rising 11.8 per cent year-on-year to 7.3 crore accounts.
The report attributed this sustained momentum to complete coverage initiatives for the MSME (Micro, Small, and Medium Enterprises) sector, together with the implementation of a number of government-backed credit score schemes, which have performed a pivotal function in supporting credit score enlargement.
Nevertheless, the tempo of progress has moderated in comparison with the earlier quarter, when year-on-year progress stood at 19.3 per cent. This moderation could replicate extra cautious underwriting by lenders in addition to seasonal differences, the report stated.
Regardless of this, the quicker progress in credit score excellent in comparison with mortgage volumes signifies regular enlargement in common ticket sizes.
By way of product combine, working capital loans dominate enterprise lending, accounting for round 57 per cent of the portfolio excellent, whereas time period loans proceed to assist capital expenditure wants. For sole proprietors, loans in opposition to property (LAP) kind the most important part, adopted by enterprise loans and business car loans.
The report additionally shared that the unsecured lending additionally recorded sturdy momentum, with unsecured loans rising 31 per cent year-on-year regardless of issues round stress in sure segments. (ANI)