A Record Credit Stock, an Uneven Flow: Reading the MSME Pulse Report

The TransUnion CIBIL-SIDBI Pulse Scope

The MSME Pulse report published by TransUnion CIBIL and the Small Industries Development Bank of India, SIDBI, in December 2025 combined lending to entities in the commercial bureau with business loans taken by individuals in a personal capacity. It compared December 2025 with December 2024.

Headline numbers

• Consolidated MSME credit outstanding was Rs 67.6 lakh crore in December 2025, up from Rs 58.2 lakh crore a year earlier, which is 16% growth. The five-year compound annual growth rate, from December 2020, was 17%. • Property loans within commercial lending and secured business loans to individuals each grew 43% year on year. Unsecured business loans to individuals grew 33%. Commercial lending to enterprises grew only 5%. • Combined delinquency, measured as 90-plus days past due and sub-standard at balance level, fell from 2.01% to 1.87%. Serious delinquencies were 1.9%, the lowest in five years. The report noted that delinquency hit an all-time low in March 2025 and had ticked up slightly since, with non-bank lenders showing the largest increase. • The low-risk share of commercial lending rose from 43% in December 2022 to 55% in December 2025.

“Total credit can rise while the door for newcomers narrows.”

Sector and geography

Manufacturing held a 38% share, down about two points in four years, with growth of 11%. Trade had a 31% share and was the only sector where delinquency rose, by 2 basis points. Professional and other services had a 17% share and grew 16%. Maharashtra, Gujarat, Tamil Nadu, Uttar Pradesh and Delhi together held about 47% of the portfolio, and Delhi had the fastest growth among the top ten states at 32%.

Penetration and new lending

About 7.7 crore enterprises were registered on Udyam, of which about 3.6 crore were credit-active, giving 47% penetration. But the indexed value of new credit originated, with December 2021 at 100, was 107 in both December 2024 and December 2025, meaning new lending was broadly flat. The share of new-to-credit borrowers fell from 36% in December 2021 to 29% in December 2025. Non-bank lenders accounted for 26% of origination value and 40% of volume in the nine months to December 2025.

What the numbers suggest: our analysis

1. The stock grows faster than the flow. Outstanding credit can rise even when new lending is flat, because older loans keep accruing and balances compound. Founders should not read 16% growth as meaning it is 16% easier to get a loan. 2. Lending is shifting toward secured and individual borrowers. Growth in property-backed and individual business loans, against 5% for commercial entity lending, suggests lenders prefer collateral. A small firm without property may find the market harder. 3. Risk quality is improving. A larger low-risk share and low delinquency make lenders more comfortable, which should help firms with good records. 4. Fewer first-time borrowers. The decline in new-to-credit borrowers suggests it is harder for newcomers to enter formal credit. That matters to young businesses and to the policy goal of formalisation. 5. Concentration. Five states hold nearly half the credit, so firms in other regions may face thinner supply.

Cautions

The report combines commercial and individual lending. A loan taken by a proprietor in a personal capacity for business use is counted, which is useful but means the numbers differ from bank-reported priority-sector data. We have not seen the underlying dataset, and a single year-on-year comparison does not show trends in rates, tenor or approval rates.

What a borrower can do

Check your own credit record before approaching lenders and correct errors. Keep GST returns, bank statements and invoices consistent. If you lack collateral, ask about guarantee-backed products and invoice-based financing. If you are new to credit, start with a small facility and repay on time; the repayment record is what opens larger limits.

For lenders and policymakers

The data raise a question about how to lend to newcomers without collateral. Cash-flow-based lending, using GST and bank data, is one answer that the market is trying.

Building a record that lenders trust

For a young business, the most useful steps are unglamorous: file GST returns on time, route sales through the business bank account, avoid frequent overdrafts and keep customer and supplier contracts on file. A twelve-month record of regular inflows is often more persuasive than a forecast. Editorial analysis based on the TransUnion CIBIL-SIDBI MSME Pulse report (Dec 2025). Our interpretation is labelled as such.