·       Telangana and Andhra Pradesh have 19.6 lakh and 23.8 lakh entrepreneurs respectively who have never borrowed as enterprises, highlighting a sizeable opportunity to formalize business lending

·       Nationally, micro business entrepreneurs account for ₹29.6 lakh crore in outstanding commercial credit, with individual borrowing growing at 21% CAGR

Hyderabad, India, 29^th October 2026: Micro business entrepreneur (MBE) credit markets in Telangana and Andhra Pradesh have reached approximately ₹1.74 lakh crore and ₹1.45 lakh crore in outstanding balances respectively as of June 2026, with business-purpose borrowing by individuals growing significantly faster than lending to micro businesses. Over the last three years, outstanding balances held by individual entrepreneurs expanded at a 26% compounded annual growth rate (CAGR) in Telangana and 25% in Andhra Pradesh, compared with 13% and 11% respectively among micro businesses, reflecting the growing role of individual borrowing in financing entrepreneurial activity across both states.

This expansion is also bringing attention to a sizeable opportunity in enterprise-level credit. Approximately 19.6 lakh individual entrepreneurs in Telangana and 23.8 lakh in Andhra Pradesh had never borrowed as enterprises as of March 2026. In Telangana, 62% of these entrepreneurs demonstrated strong creditworthiness, while 61% in Andhra Pradesh had CIBIL Scores of above 730. These findings, from Micro Business Entrepreneurs in India: Growth, Transformation & Emerging Opportunities, a joint study by TransUnion CIBIL and the National Small Industries Corporation Limited (NSIC), highlight the potential to widen access to structured business financing among entrepreneurs who already have established individual credit profiles.

Across India, MBEs accounted for ₹29.6 lakh crore in outstanding commercial credit as of June 2026, representing nearly half of the overall commercial credit portfolio. Of this, ₹19.1 lakh crore was held by individuals borrowing for business purposes and ₹10.5 lakh crore by micro businesses. Individual borrower balances grew at a 21% CAGR over three years, compared with 12% among micro businesses, indicating that business-purpose borrowing in individual capacity is expanding enterprise-level credit faster than.

Chart 1 – Commercial Outstanding Balances

Property-Backed Lending Anchors Entrepreneurial Credit Growth Across Telangana and Andhra Pradesh

The micro business credit landscape across Telangana and Andhra Pradesh reflects strong demand for secured financing alongside expanding entrepreneurial activity. Loans against property (LAP) account for 53% of outstanding MBE balances in Telangana, the highest among the states analysed, compared with 41% in Andhra Pradesh. Among micro businesses, trade remains a key sector, accounting for 33% of outstanding balances in Telangana and 43% in Andhra Pradesh, while manufacturing contributes 17% and 18% respectively. Non-bank finance companies (NBFCs) continue to support individual entrepreneur financing across both states, accounting for nearly 48% of individual borrower balances in Andhra Pradesh and 38% in Telangana, largely through commercial vehicle and property-backed lending.

Ejaz Nazeer, Chief Product Officer TransUnion CIBIL, said: “Telangana and Andhra Pradesh have distinct entrepreneurial ecosystems, with financing needs shaped by different sectors, business models and stages of growth. Property-backed lending continues to play an important role, while traders, transport operators and small manufacturers increasingly require credit solutions aligned with their operating needs. As entrepreneurs develop established borrowing histories, lenders have an opportunity to assess their business cash flows and provide financing that evolves alongside their enterprises. Strengthening this progression from individual borrowing to enterprise-level credit can help entrepreneurs access a wider range of financial solutions and support sustainable business expansion across both states.”

Shri Suresh Babu, Zonal General Manager (South Zone), National Small Industries Corporation Limited (NSIC), said: "Telangana and Andhra Pradesh have strong entrepreneurial ecosystems led by traders and manufacturers. The report points to a sizeable 'missing middle' in both states. About 19.6 lakh entrepreneurs in Telangana and 23.8 lakh in Andhra Pradesh borrow for business purposes in their individual capacity but have never borrowed as enterprises, and most of them have healthy credit profiles. Helping this missing middle move to enterprise-level credit can open up working capital and growth finance for them, and reduce their dependence on personal assets as collateral. At NSIC, we support small enterprises with access to markets, credit, raw materials, technology and public procurement. We will continue working with lenders and partners such as TransUnion CIBIL to help more entrepreneurs in both states formalise and grow."

Bridging the Gap Between Individual Borrowing and Enterprise-Level Credit

A significant number of India's MBEs have established borrowing histories in their individual capacity but have yet to access credit as formal business entities. As of March 2026, approximately 3.9 crore individual business borrowers across India had never borrowed in an enterprise capacity. Among them, 54% had two or more years of business-credit experience, while 63% had a CIBIL Score of above 730, indicating a substantial pool of borrowers with established credit profiles.

For lenders, this represents an opportunity, subject to their applicable credit policies, underwriting criteria and regulatory requirements, to support entrepreneurs as they progress from individual business borrowing towards enterprise-level credit. Greater access to working-capital facilities, cash credit and overdraft products could help businesses meet evolving financing requirements, while reducing their dependence on personal assets as collateral.

Chart 2 – Opportunity for Formalising Enterprise Credit Access

The opportunity for deeper enterprise credit access across Telangana and Andhra Pradesh is supported by established borrowing histories and healthy credit profiles. Among entrepreneurs who had never borrowed as enterprises, 56% in Telangana and 57% in Andhra Pradesh already possessed business borrowing experience of at least two years.

As of June 2026, 53% of outstanding individual business borrower balances in Telangana and 44% in Andhra Pradesh belonged to the above prime segment¹. Portfolio performance also remains relatively healthy, with 90+ days delinquency at 1.7% in Telangana and 2.1% in Andhra Pradesh. In Andhra Pradesh, delinquency improved by approximately 53 basis points (bps) over the last three years. These trends highlight the opportunity to expand structured enterprise financing among eligible entrepreneurs across both states.

Secured Lending Remains Central to Micro Business Credit

Across India, lending to MBEs remains predominantly supported by secured and collateral-backed products. LAP accounted for ₹10.9 lakh crore in outstanding balances as of June 2026, making it the largest product category, followed by cash credit and overdraft facilities at ₹5.6 lakh crore and commercial vehicle loans at ₹5.0 lakh crore. These financing patterns reflect the continued importance of collateral in supporting business borrowing, while also highlighting opportunities to expand cash-flow-based and working-capital-oriented lending.

The expansion in micro business credit has been accompanied by improving portfolio quality. Overall delinquency levels declined from approximately 3.0% in June 2023 to 1.9% in June 2026, reflecting stronger repayment performance amid sustained credit growth. As financing becomes more accessible, understanding the credit needs and repayment capacity of different entrepreneur segments will remain important for maintaining portfolio resilience.

Enabling the Next Phase of Micro Business Growth

As India's entrepreneurial ecosystem expands, the next phase of micro business credit growth will increasingly depend on enabling businesses to progress towards more structured enterprise financing. Wider adoption of cash-flow-based underwriting, credit guarantee mechanisms and digital financial information can help lenders assess viable businesses beyond traditional collateral-based approaches.

Strengthening the connection between individual business borrowing and enterprise-level credit can support greater formalisation, improve access to financing suited to different stages of business growth and create new opportunities for entrepreneurs across India.

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1. Enhanced CreditVision (CV) score ranges are: Below Prime = 300-730; Prime = 731-800; Above Prime = 801-900.

• TransUnion CIBIL marks its 25^th anniversary with a storytelling-led brand and consumer outreach campaign
• Partners with Amar Chitra Katha to launch a special edition, ‘CIBIL Ki Kahaniyan’ (‘Stories of CIBIL’), using Tinkle’s iconic character Suppandi to explain credit concepts in a fun, engaging way
• Rolls out print, radio and digital campaign to reinforce the role of a credit bureau and credit score in enabling financial inclusion
• In these 25 years, TransUnion CIBIL has connected with over 7,000 institutions, enabling better-informed lending decisions. As of July 2025, 164 million consumers have self-monitored their CIBIL Score and Report.

Mumbai, India, 21^st August, 2025: TransUnion CIBIL, India’s pioneering insights and information company, is celebrating 25 years of building trust in India’s credit ecosystem with a storytelling-led brand and consumer outreach campaign.  

At the heart of its silver jubilee celebration is ‘CIBIL Ki Kahaniyan’, a special edition of the legendary Tinkle comic book created in collaboration with the Amar Chitra Katha stable, known to generations of Indians for its rich cultural legacy and widespread popularity. It features the beloved Tinkle character Suppandi, alongside two new characters Simran, his finance-savvy friend, and MyCIBIL a friendly personification of the CIBIL Score. The comic uses humour and storytelling to demystify credit concepts, explain the role of a credit bureau and highlight how responsible credit behaviour impacts the CIBIL Score.

Together, the trio takes readers on a light-hearted and informative journey through the world of credit. By appealing to adults who grew up with Suppandi and to younger readers starting their financial journeys, it makes learning about credit awareness both accessible and entertaining. Read the special ‘CIBIL Ki Kahaniyan’ edition with Suppandi and his friends here: https://www.cibil.com/content/dam/cibil/web-resources/pdf/comic.pdf?utm_source=PR&utm_medium=ack-campaign&utm_campaign=ack.

In parallel, TransUnion CIBIL has launched a campaign across print and social media, and will engage in a multi-city radio campaign. With the tagline, ‘Sahi CIBIL Score, Badhaaye Khushi Ka Score’ (“The right CIBIL Score can increase your happiness quotient”), the campaign reframes the credit score from a technical number into a personal enabler of dreams, whether it’s owning a home, starting a business, or funding education. The campaign underscores how credit confidence is integral to modern aspirations.

Blending nostalgia, cultural familiarity, and financial literacy, the initiatives bring credit awareness and the importance of the CIBIL Score into everyday life through engaging, relatable narratives.

Mr. Bhavesh Jain, MD & CEO, TransUnion CIBIL, said: “This milestone is not merely a reflection of time, it is a testament to the trust we’ve earned and the impact we’ve made. For 25 years, TransUnion CIBIL has played a foundational role in supporting India’s credit ecosystem. These campaign initiatives are designed to show how credit has enabled progress and been a catalyst for transformation. We are proud to have contributed to India’s financial journey and remain deeply committed to advancing inclusive and responsible credit access.”

“Behind every CIBIL Score is a story of dreams pursued, of resilience, and of progress. We hope that the stories we share through these campaign partnerships will inspire more people to learn about credit scores and responsible credit behaviours. Our focus remains on deepening our impact by helping communities across India access the opportunities they deserve. We are grateful to be part of this journey and remain committed to building a more inclusive and resilient credit ecosystem for all,” said Jain.

Mr. V. Anantharaman, Chairman, TransUnion CIBIL, said: “Over the past 25 years, TransUnion CIBIL has stood for trust, transparency, and financial empowerment. Our journey reflects the strength of the partnerships we have built. We have worked closely with regulators, lenders, and ecosystem players, and each step has reinforced our role in shaping India’s credit environment. We remain committed to making it inclusive as we continue to lead with information and insights, and stay focused on building a system that is ready for the future.”

Ms. Gayathri Chandrasekaran, Editor-in-Chief of Tinkle, says, “Suppandi’s simplicity and comic timing make him one of India's most loved comic characters, appealing to children and adults alike. Who better than him to demystify the world of credit scores and credit ratings? We also created two mascots, Simran and MyCIBIL, who along with Suppandi, promote credit literacy via comics. Our motto at Tinkle is ‘Where Learning Meets Fun’, and Amar Chitra Katha is very happy to have partnered with TransUnion CIBIL to make credit awareness and empowerment accessible to all. The process of creating ‘CIBIL Ki Kahaniyan’ was very interesting for us, and I’m happy to say our team has started checking their CIBIL score regularly!”

In the last 25 years of TransUnion CIBIL’s operations in India, it has connected with over 7,000 institutions, enabling better-informed lending decisions. As of July 2025, 164 million consumers have self-monitored their CIBIL Score and Report.

In India, over the last couple of decades, more than 700 million individuals have gained access to formal credit, transforming households across the country. Over 36 million commercial entities have been similarly empowered, with over 85 million active microfinance borrowers. Over the past decade, 118 million women have entered the formal credit system, unlocking greater financial independence. Credit adoption among younger and first-time borrowers has accelerated, driven by targeted outreach and data-driven onboarding.

About TransUnion CIBIL:

India’s pioneer information and insights company, TransUnion CIBIL, makes trust possible by ensuring each person and business entity is reliably represented in the marketplace. We do this by providing an actionable view of consumers and businesses, stewarded with care.

We have developed technology and innovative solutions across core credit, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® and it leads to economic opportunity, great experiences, and personal empowerment for millions of people and MSMEs in India.

We serve the financial sector as well as MSMEs and individual consumers. Our customers in India include banks, credit institutions, NBFCs, housing finance companies, microfinance companies, telecom companies and insurance firms.

For more information visit www.transunioncibil.com

About Amar Chitra Katha:

Amar Chitra Katha, founded in 1967 by Anant Pai, is India's largest and one of India's oldest comic book companies, with a library of over 600 titles in 20 languages covering mythology, history, fables, folklore and classical Indian literature. Selling over 5 million copies annually, it has expanded digitally, reaching a global audience through the ACK Comics App, Kindle, and platforms like Alexa, Audible and YouTube. Having collaborated with over 500 brands, it continues to introduce new titles and adapt its iconic art style for new generations of readers worldwide.

Mumbai, June 20, 2025 – To further support banks and credit institutions in driving robust credit growth in India’s commercial businesses category, TransUnion CIBIL, India’s leading information and insights company, has launched CreditVision® CIBIL Commercial Rank (CV CMR) ­­ — a next-generation credit risk assessment model. This enhanced model helps lenders make sharper, more responsible decisions across the commercial lending ecosystem. CV CMR brings greater precision, wider borrower coverage, and deeper insights into credit behavior, ultimately enhancing the commercial lending process.

As a trusted partner in the journey to grow businesses in a sustainable and viable manner, TransUnion CIBIL has long supported credit institutions with data insights, products, and solutions. One of its analytical innovations that transformed commercial credit risk assessment is the CMR, launched in 2017, with approximately 60% of all commercial loan originations in the industry backed by CMR at present. Over the past eight years, this solution has played a pivotal role in helping credit institutions assess and manage credit risk with greater objectivity and precision and help more businesses achieve their financial goals.

In response to evolving borrower behavior and shifting market dynamics, TransUnion CIBIL has launched CV CMR, which is built on the trusted CreditVision® framework, enabling smarter, more strategic lending. The original CMR model has already demonstrated strong traction, with a majority of lenders using it to support informed credit decisions. Building on this growing adoption and proven impact, CV CMR delivers enhanced capabilities that offer deeper insights and expanded coverage. Its effectiveness is reinforced by key performance metrics:

·       Robust model stability: >90% of borrowers remain in the same or within ±1 rank notch over the next three months, enabling consistent onboarding decisions

·       Superior risk differentiation: Bad rates range from 0.9% to 98.3% across CMR-1 to CMR-10, with an even distribution of borrowers across ranks

·       Wider sourcing funnel: CV CMR allows lenders to access an additional ~5%-7% of better ranked borrowers (CMR-1 to 3) at the inquiry stage, expanding the potential approval funnel. CV CMR also expands the rank eligible base by approximately 12%, enabling access to previously unranked businesses and unlocking new lending opportunities

Developed using TransUnion CIBIL’s proprietary CreditVision® algorithms, CV CMR is tailored to reflect the nuances of India’s evolving commercial lending sector. It increases the observation period from 24 to 36 months, giving lenders a more comprehensive view of borrower performance. This leads to better-informed lending decisions and stronger risk differentiation across borrower types and loan products.

Speaking at the launch, Mr. Bhavesh Jain, Managing Director and CEO of TransUnion CIBIL, said, “India’s MSME sector is a significant driver of economic growth, contributing to employment, innovation, and regional development. With over seven crore MSMEs, the momentum in commercial lending is undeniable. We are witnessing healthy credit demand and stable portfolio performance, particularly as MSMEs continue to seek funds for working capital, expansion, and resilience. Providing MSMEs with clearer and more accurate credit insights is essential for driving sustainable financial inclusion. Businesses with active exposure up to ₹50 crores fall under the ambit of CV CMR. CV CMR equips lenders with the ability to make quicker, more informed decisions, streamlining the overall lending process to commercial businesses. In doing so, it contributes to fostering a self-reliant and inclusive economy, where deserving businesses can access the capital necessary for growth and long-term economic prosperity."

Mr. Rajiv Sabharwal, MD & CEO of Tata Capital Limited said: “We are happy to see that TransUnion CIBIL has enhanced its flagship CMR to incorporate recent changes in market dynamics with the launch of CV CMR (Credit Vision - CIBIL Commercial Rank). By using an increased observation window and more recent data to develop the Rank, the risk differentiation in CV CMR is expected to be sharper and therefore the Rank will be more robust. I wish TransUnion CIBIL the very best in its endeavor as it has always been the pioneer in effective solutions which have helped financial institutions make the right credit decisions and managing risk robustly.”

Mr. Ravinder Singh, MD, SVC Co-operative Bank said: “TransUnion CIBIL’s CMR has helped us greatly in streamlining our credit assessment process and in making credit available to the deserving businesses at a faster and cheaper rate. With the enhanced version i.e. Credit Vision CIBIL Commercial Rank (CV CMR), which considers longer credit vintage, we are confident that we will be able to further widen our credit reach to the underserved and unserved population of small businesses.”

Mr. Sanjay Agarwal, CEO of Ambit Finvest said: “CMR has helped bring more structure to small business lending across our branches. With a clear, consistent risk rank available, our credit officers are able to apply standardized credit frameworks more confidently. This has improved speed of assessment, reduced subjectivity, and helped us manage credit quality more optimally  across regions. The enhanced CV CMR will likely help us streamline these processes even further with improved model accuracy and broader data coverage.”

The CV CMR model segments borrowers based on credit behavior and industry best practices, allowing for more efficient and tailored decision-making. Additionally, CV CMR supports digital lending journeys by improving approval ratios, leading to faster and more accurate credit decisions. The 10-scale rank of CV CMR (CMR-1 to CMR-10) is based on the observed empirical 90+ days past due default rates. CMR-1 is the best possible rank and carries the least default rate as opposed to CMR-10 which has the highest default rate — the higher the default rate, the riskier the credit profile. CV CMR classifies borrowers based on these fundamentals, and at present the portfolio credit quality suggests that 73% of ranked commercial borrowers belong to the lender-preferred rank scale.

Presently, there are 94 lakh active commercial borrowers, a 1.5X increase since 2020. This progress has been aided by initiatives like Pradhan Mantri MUDRA Yojana (PMMY), Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Government e-Marketplace (GeM), Trade Receivables electronic Discounting System (TReDs), Open Credit Enablement Network (OCEN), and Open Network for Digital Commerce  (ONDC), creating a fertile ground for commercial lending and reinforcing the value of tools like CV CMR in advancing prudent credit expansion.

About TransUnion CIBIL

India’s pioneer information and insights company, TransUnion CIBIL, makes trust possible by ensuring each person and business entity is reliably represented in the marketplace. We do this by providing an actionable view of consumers and businesses, stewarded with care.

We have developed technology and innovative solutions across core credit, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences, and personal empowerment for millions of people and businesses in India.

We serve the financial sector as well as end consumers – both retail and non-retail. Our customers in India include banks, NBFCs, housing finance companies, microfinance institutions, co-operative banks, regional rural banks and insurance companies.

For more information visit www.transunioncibil.com

Mumbai, India, 22 May 2025: The commercial credit portfolio for India’s Micro, Small and Medium Enterprises (MSME) sector grew at 13% year-over-year (YoY) as the overall credit exposure increased to Rs 35.2 lakh crore as of March 31, 2025. This trend was largely driven by an increase in credit supply to existing borrowers, according to TransUnion CIBIL and SIDBI’s MSME Pulse Report for May 2025. The MSME sector includes borrowers with credit exposures up to Rs 50 crore.

Growth in the overall credit portfolio was accompanied by an improvement in balance-level serious delinquencies (measured as 90 to 720 days past due (DPD) and reported as ‘sub-standard’), which fell to 1.8%, a five-year low.

Credit Performance Remains Strong, With Reduction in Balance-level Delinquencies

Overall MSME balance-level delinquencies improved to 1.8%, a 35 basis points drop from 2.1% in March 2024. This improvement was primarily driven by the borrower segment with exposure of Rs 50 lakh to Rs 50 crore. The borrower segment with exposure up to Rs 10 lakh, however, witnessed a slight deterioration at 5.8% in March 2025 compared to 5.1% in March 2024. Similarly, the borrower segment with exposure from Rs 10 lakh to Rs 50 lakh also saw a marginal rise in the delinquency level to 2.9% as compared to 2.8% in March 2024.

Chart 1: Balance Level Delinquencies

MSME Credit Growth Momentum Remains Robust

The demand for commercial credit, which is measured by the number of enquiries, grew 11% YoY in the quarter ending March 2025. Commercial credit supply (by value) grew 3% YoY in FY 2024-25. However, in the last quarter (Jan-Mar 2025) there was a decline of 11% YoY possibly due to higher credit concerns among lenders arising from increased external headwinds. Despite this slowdown in origination, credit extended through new cash credit facilities remained resilient with 7% YoY growth for the same quarter. While the share of New-to-Credit (NTC) MSME borrowers to total new loan originations continued to be strong at 47% as of March 2025, it was lower than the share of 51% one year prior.   

In the quarter ending March 2025, public sector banks offered 60% of NTC originations. The trade sector contributed the greatest proportion of NTC borrowers at 53%, while the manufacturing sector saw the highest YoY growth (70%) in the number of NTC borrowers originating a commercial loan.

The manufacturing sector had a greater share of the origination value, at 34%, despite contributing to only 23% of all new loans disbursed in the quarter ending March 2025. However, the share of originations by value to the manufacturing sector has declined steadily over the last two years and shifted in favor of professionals and other services and other sectors, which now contribute to 36% of all new loans disbursed by value, up by five percentage points in the last four years.

Maharashtra, Gujarat, Tamil Nadu, Uttar Pradesh and Delhi continued to dominate commercial lending, together accounting for 48% of the value of overall originations in the quarter ending March 2025. While the manufacturing sector had the greatest share of originations in Maharashtra, Gujarat, Tamil Nadu and Delhi, Uttar Pradesh had the most originations to the trade sector.

Mr. Manoj Mittal, Chairman and Managing Director, Small Industries Development Bank of India (SIDBI) said: “The MSME sector plays a crucial role in generating employment opportunities and contributes to export growth. Though the credit flow to the sector has improved over the years, the sector still has an addressable credit gap. Providing support to MSMEs can help the sector’s growth and aid the overall economic growth of our country. By fostering innovation, enhancing skill development programs and improving access to financial resources, we can empower MSMEs to become more competitive on a global scale. This in turn will bolster the sector and drive sustainable economic development and inclusive growth across the nation.”

Mr. Bhavesh Jain, MD and CEO, TransUnion CIBIL said: "For MSMEs to achieve sustainable growth, it is imperative that they receive assistance in accessing formal credit and guidance in debt management. Additionally, fluctuations in the business cycle affect these enterprises disproportionately, as they often lack the financial reserves or support necessary to navigate adverse conditions. Therefore, it is crucial to extend support to this sector and equip them with tools for effective financial management."

Disclaimer: This Information above is based on the SIDBI and TransUnion CIBIL MSME Pulse Report. SIDBI and TransUnion CIBIL do not guarantee the adequacy or completeness of the information and/or its suitability for any specific purpose. SIDBI and TransUnion CIBIL shall not be responsible for any reliance on the Information. The reader should carry out all the necessary analysis that is prudent in their opinion before making any decisions.

About TransUnion CIBIL

India’s pioneer information and insights company, TransUnion CIBIL, makes trust possible by ensuring each person and business entity is reliably represented in the marketplace. We do this by providing an actionable view of consumers and businesses, stewarded with care.

We have developed technology and innovative solutions across core credit, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences, and personal empowerment for millions of people and MSMEs in India.

We serve the financial sector as well as MSMEs and individual consumers. Our customers in India include banks, credit institutions, NBFCs, housing finance companies, microfinance companies, telecom companies and insurance firms.

For more information visit www.transunioncibil.com

About SIDBI

Since its formation in 1990, SIDBI has been touching the lives of citizens across various strata of society through its integrated, innovative and inclusive approach. SIDBI has directly or indirectly impacted the lives of Micro, Small and Medium Enterprises (MSMEs) through various credit and developmental measures whether they are traditional, domestic small entrepreneurs, bottom-of-the-pyramid entrepreneurs, or high-end knowledge-based entrepreneurs. 

• Consumption-led credit supply continued to decline, with a more pronounced impact on New-to-Credit (NTC) consumer originations
• Growth rate of credit active consumers at slowest since December 2021 
• Credit performance for personal loans showed signs of stabilization for the first time since June 2023

Mumbai, India, 26 March 2025 – India’s retail credit growth continued to moderate in the quarter ending December 2024, particularly among New-to-Credit (NTC)¹ consumers. This was most evident for consumption-led credit products originated by NTC consumers, which saw a 21% year-over-year (YoY) decline in loan originations, compared to a decline of 2% for consumers with existing credit. Consumption-led products are defined as credit cards, personal loans and consumer durable loans.

Originations are a measure of new accounts opened and are driven by both consumer demand and lender supply. Lenders’ cautious approach to the origination of consumption-led credit products disproportionately affected NTC borrowers because 40% of NTC borrowers choose consumption-led products as their first foray into formal credit.

These trends highlight the need for focused lender strategies to expand credit supply to this segment and were some of the findings in the TransUnion CIBIL Credit Market Indicator (CMI)² report for the quarter ending December 2024.

The CMI is a comprehensive measure of data elements that are summarized monthly to analyse changes in credit market health, categorized under four pillars: demand, supply, consumer behaviour, and performance. These factors are combined into a single, comprehensive CMI indicator, and pillars can also be viewed in more detail individually. A higher CMI reading indicates that the credit market health is generally improving, while a lower reading indicates a decline in credit market health. The CMI for December 2024 was 97, lower than 103 in December 2023 and the lowest since December 2021.

Chart 1: Credit Market Indicator (CMI) Dec 2021- Dec 2024

“The acquisition strategies adopted by lenders in response to risk-adjusted returns for unsecured lending products have disproportionately affected the New-to-Credit segment, which represents first-time borrowers,” said Mr. Bhavesh Jain, the MD and CEO of TransUnion CIBIL. “We have seen that sustainable credit growth can be achieved among NTC consumers by lenders who use advanced information analytics and technology-based solutions.”

Credit Supply Continued to Moderate Across Products, Particularly to NTC Consumers

In the quarter ending December 2024, the CMI for credit supply declined to 91 from 95 the same period the year before. A slower growth rate in originations across products and continued decline in originations to NTC consumers drove this change. Home loan and credit card originations declined YoY in the three-month period ending December 2024, while the growth rate for other retail loan products, while positive in the most recent quarter, was at a slower rate than in the same quarter in 2023.

Table 1: YoY Growth in Origination volumes (Accounts)

In the quarter ending December 2024, the share of total loan originations by NTC consumers decreased to 17% from 21% in December 2023. The decline in the share of NTC consumers in loan originations is consistent across key product segments.

Younger generations formed the largest cohort of NTC consumers, with Gen Z (born in 1995 or later) comprising 41%. The share of women borrowers stood at 37% of NTC originations, which was higher than the share of women among Existing to Credit (ETC) borrowers at 27%. Of NTC consumers, 32% were from rural geographies, while 23% of ETC consumers were from rural geographies. The higher percentage of women among NTC originations compared to ETC originations, along with the notable presence of NTC consumers from rural areas, highlights efforts by lenders to reach and support these important demographics. These efforts demonstrate a commitment to fostering financial inclusion and ensuring that more individuals have the opportunity to participate in the formal credit system.

Lenders providing NTC borrowers with their first loan or credit facility can leverage this base to create higher lifetime value, making it a profitable proposition to drive sustained growth. An analysis of TransUnion CIBIL data on consumers who opened their first ever credit product in FY2022-2023 showed that one in three NTC consumers availed a second credit product in the subsequent 12 months. Of the consumers availing the second loan, 44% chose to do so with the same lender.

“India’s youth, women, and consumers in rural areas represent a large share of first-time credit seekers. For India to achieve meaningful, sustainable, and inclusive economic growth, it is imperative to include these consumers into the formal lending ecosystem. Expanding their access to credit directly correlates with improved quality of life and financial empowerment of these individuals,” said Mr. Jain.

Slow Growth in Credit Active Consumers

The continued moderation in credit supply over the last four consecutive quarters led to the YoY growth in credit-active consumers slowing down to 9% in December 2024 from 16% in December 2023. According to World Bank data, as of December 2024, India’s credit-eligible population – consumers aged 18-80 years – stood at approximately 1,036 million, yet only 27% (around 277 million) use formal credit facilities. Approximately 451 million Indians have limited or no formal credit facilities ³.

TransUnion CIBIL’s insights show that Gen Z forms a significant share (34%) of India’s credit eligible population, but displays the lowest credit penetration at 16%. Among consumers with any credit history ever, the majority of these consumers were credit underserved.

Chart 2: Consumer Segments and Credit Experience

Note:

• Served consumers are those who are credit-visible, active consumers who have two or more years of credit history, currently have three or more credit accounts open, or have had two or more different credit product types currently or in the past.
• A newly acquired consumer is one with no prior credit history on their credit bureau file who opened their first-ever credit product in last two years.
• Underserved consumers are defined as any person who has two or more years of credit experience, but no more than two open accounts of one product type ever.

“Access to formal credit is a cornerstone of a stable financial ecosystem and a fundamental element for achieving financial inclusion and empowerment. The continued moderation in credit supply over the past year has decelerated the growth of credit-active consumers. Despite a substantial credit-eligible population, only a small percentage is currently using formal credit facilities, leaving many with limited or no access to formal products. To address this issue, it is imperative to expand and facilitate credit availability and enhance financial literacy among the credit underserved and newly acquired population," Mr. Jain said.

Credit Performance Showing Signs of Stabilization for Personal Loans

The CMI for credit performance increased marginally to 101 in the quarter ended December 2024, from 100 in the quarter ended December 2023. This was due to the improvement in balance-level serious delinquencies (measured as 90 days or more past due) for secured loans.

Table 2: Balance-Level 90+ DPD by Product (December 2024)

Balance level delinquencies for personal loans have stabilized for the first time since June 2023. The 90+ days past due balance-level delinquency rate for below prime⁴ borrowers for personal loans improved to 4.54% in December 2024, a 31 basis point improvement for these consumers compared to 4.85% in December 2023.

Stressing the need for a balanced approach towards expanding access to credit while managing risks effectively, Mr. Jain said: “Even though the positive turnaround in delinquencies may not be visible across all products yet, the trend may encourage lenders to actively seek out newer borrower segments while at the same time continuing to focus on risk-based lending. The need of the hour is to ensure that credit reaches the underserved and unserved segments of borrowers, while continuing to encourage responsible repayments by all borrowers.”

#ENDS

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¹. A New-to-Credit consumer has no prior history on their credit file.

2. The TransUnion CIBIL Credit Market Indicator (CMI) is an evolving model which is regularly reviewed to ensure the most relevant variables and their relative weighting are selected to best chart the credit health of India’s lending market. When selecting certain variables, year-on-year movements are analysed to remove the effects of seasonality. The CMI is not a stationary index; hence the level in itself is not indicative of credit health. The CMI number needs to be looked at in relation to the previous period(s) and not in isolation. A lower CMI number compared to the prior period represents a decline in relative credit health, while a higher number reflects an improvement.

3. Credit eligible population is estimated to be India’s population between age group 18-80 years. This estimate is based on World Bank’s population estimate.

4. CreditVision® (CV) score ranges are: Subprime 300–680; Near prime 681–730; Prime 731–770; Prime plus 771–790; Super prime 791-900

Disclaimer: This Information above is based on the TransUnion CIBIL Credit Market Indicator Report of December 2024. TransUnion CIBIL does not guarantee the adequacy or completeness of the information and/or its suitability for any specific purpose. TransUnion CIBIL shall not be responsible for any reliance on the Information. The reader should carry out all the necessary analysis that is prudent in their opinion before making any decisions.

Speaking on the findings of this edition of the MSME Pulse, Mr. Sivasubramanian Ramann, Chairman and Managing Director, SIDBI, said: “Lending to the MSME sector continued in H1:FY2024, despite the conclusion of the Emergency Credit Line Guarantee Scheme (ECLGS) scheme, indicating underlying growth momentum of the sector. Technology is aiding in lending to the MSME sector. Facilitating wider adoption of online loan applications, financial management tools, digital payment platforms along with utilization of robust analytics, can enhance the lending to the MSMEs and help fortify India’s businesses for sustained growth. SIDBI is working on the above lines and is leveraging technology, utilising the Digital Public Infrastructure of the Government of India, to augment credit flow to the sector with faster turnaround.”

In the July-September 2023 quarter, the total value of new MSME credit originations was INR 243K Crores, with Small segment enterprises accounting for largest share at 42%. Sustained credit supply has enabled substantial portfolio growth of 11% amounting to INR 28.2 Lakh Crores across 80 Lakh MSME entities­ in the quarter under review.

During this period, overall balance-level delinquencies, measured as 90 days-past-due to 720 days-past-due and those reported as ‘sub-standard’, have improved and stood at 2.3%.

“MSME portfolio performance improved across all borrower segments as delinquency rates declined. In the quarter ending September 2023, we saw the lowest delinquency rate in the last two years. With promising economic growth prospects reflected through strong demand, stable portfolio growth and improved credit performance, now is a good time for lenders to expand their MSME lending book. The sectoral study covered in this MSME Pulse report showcases the unique nuances of each sector within the MSME segment. The wide spectrum of occupations covered by MSMEs has the potential of catalysing social development through economic empowerment,” added Mr. Rajesh Kumar, Managing Director and CEO, TransUnion CIBIL.

The MSME portfolio excludes ~ ₹ 2.5 lakh crores of default cases beyond 720 days past due (DPD) /loss /doubtful category. Delinquency rate definition excludes legacy accounts with DPD beyond 720 days or reported as loss/doubtful

By building an online lending journey with analytical and objective credit risk assessment tools like FIT Rank, lenders can achieve improved operational efficiencies and reduce turnaround times significantly.

Rapid credit expansion across semi-urban and rural geographies

In the July-September 2023 quarter, 46% of MSME originations were in semi-urban and rural regions. Almost half (49%) of the Micro² segment’s originations came from the semi urban and rural areas, where 39% of originations in the Small segment come from these regions.

Micro Exposure up to INR 1 Cr; Small: Exposure between INR 1 Cr and INR 10 crs; Medium Exposure between INR 10 crs and INR 50 crs

Medium Risk: CMR 4-6 (Share of Borrowers)

Risk percentage is based on the origination data where risk score is available.

One of the key factors contributing to this expansion is the improvement in credit profiles of MSMEs – the share of high risk MSMEs (CMR 7-10) has reduced to 13% in the July-September 2023 quarter from 15% during the same period previous year. Medium risk (CMR 4-6) continues to have high share with 55% of MSMEs in this risk segment. 

Analysis across the states shows that originations from the large states with Maharashtra, Gujarat, Delhi, Tamil Nadu, and Uttar Pradesh continue to be high, accounting for 47.2% of the origination value. There is also a higher growth rate especially in Uttar Pradesh and Tamil Nadu in the quarter ending Sep 2023.

These states also account for approximately 42% of New-to-Credit (NTC) originations in the Micro MSME segment, further driving the credit inclusion initiative. Within the Micro² MSME segment, Maharashtra has a high share in the low-ticket sized Very Small segment and Micro1 segment, while Gujarat has high share in Micro 2 segment.

Manufacturing sector accounts for highest credit originations

As per the latest information released by the Ministry of Statistics and Programme Implementation in December 2023, output in MSME manufacturing accounted for 40.83% of output in all India manufacturing during the year 2021-22. This is also reflected in TransUnion CIBIL Commercial bureau data where the Manufacturing sector¹ accounts for 37% of value originated and has the largest share, followed by the ‘Trades’ sector with a 28% share. Professional Services and Other Sectors together account for the remaining 35% share (of the data considered for this report).

Textiles is the highest contributing sub-sector within Manufacturing sector originations. The majority of originations within sub-sectors are led by the Medium segment (10 Crores to 50 Crores) and catered for by private banks. The geographical distribution of originations across sub-sectors is concentrated in three top-contributing states: Gujarat, Tamil Nadu, and Maharashtra. While the manufacturing sector accounts for 37% of origination value it has only 25% share of the volumes originated. However, the manufacturing sector experienced an increased share in originations by value within the Micro² segment compared to the previous year. The ‘Trade’ sector accounts for the highest share of origination volumes with 39% of loans originated; 36% of these disbursements are from NTC MSMEs.

As the borrower profile and credit behaviour of each sector is different, these borrowers’ credit performance is also differently influenced by intrinsic sectoral impact. Leveraging data and analytics to understand borrower behaviour is essential to continue sustainable growth across sectors.  The core advantage of sector-wide growth is the vast geographical expanse it covers, spreading through areas where urbanization and multiple employment opportunities and development are essential.

1.      Manufacturing which includes Textiles, Food Processing, Basic Metals, Vehicles etc; Trade includes Retail trade and Wholesale trade; Professional and Other Services includes Professional Services, Hotel Tourism; Other Sectors includes Transport, Construction, Agriculture and allied activities.

2.      Commercial loans classified on the basis of credit exposure aggregated at entity level, Micro: exposure up to ₹ 1 crores Very Small: < ₹ 10 lakhs; Micro1: Exposure between ₹ 10 lakhs and ₹ 50 lakhs; Micro2: Exposure between ₹ 50 lakhs and ₹ 1 crores.