Latest News | MSME Credit Origination Decline 7 Pc in FY25 as Lenders Stay off Micro Loans: Report

Mumbai, Jun 26 (PTI) MSME credit originations declined by over 7 per cent in FY25, as lenders preferred to stay off writing micro-loans under Rs 1 crore, a credit information company said on Thursday.

The originations by value declined by 7.4 per cent to Rs 36.9 lakh crore from Rs 39.9 lakh crore in FY24, the report by Crif High Mark said, adding that this was largely because loans in the micro segment declined to Rs 11.8 lakh crore in FY25 from Rs 18.2 lakh crore in FY24.

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By volume, the micro, small and medium enterprises originations increased to 75.8 lakh in FY25 from 64.7 lakh in FY24, it said, adding that this was also possible on the back of a big jump in the micro-segment to 58 lakh from 49.8 lakh in FY24.

From a value perspective, loans between Rs 1-50 crore reported a jump.

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Loans made to the small segment (between Rs 1-10 crore) increased to Rs 12.1 lakh crore in FY25 from Rs 11 lakh crore in the year-ago period, while the same in the medium segment (between Rs 10-50 crore) increased to Rs 13 lakh crore from Rs 10.7 lakh crore.

These shifts are likely indicating a "strategic pivot" by lenders toward high-value borrower segments, the report said.

There was a moderation in the active loan front as well, largely because of a sluggish increase in microloan borrowers, it added.

The active MSME loans grew by just 1.3 per cent in FY25 against a 23.7 per cent jump in FY24, it said.

However, even as the originations by value and active loans faced some headwinds, the portfolio outstanding showed a handsome increase of 20.1 per cent to Rs 40.4 lakh compared to an 18.5 per cent jump to Rs 33.6 lakh crore in FY24, the report said.

There was an improvement from a stress perspective as well, with the portfolio at risk of loans overdue for between 91-180 days declining to 1.2 per cent from 1.3 per cent in the year-ago period.

Maharashtra had the highest concentration of MSME loans at Rs 6.2 lakh crore, but the portfolio grew slower than the overall level at 14.8 per cent, the report said.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)