Mumbai : CRIF High Mark, one of India’s leading credit bureaus, has released a special edition of its MSMEx Spotlight Report on “Early Indicators of Geopolitical Impact”, offering a detailed view of how resilient the MSME ecosystem is when confronted with external shocks, and where are the first signs of strain beginning to appear. The report highlights that the ongoing geopolitical uncertainty is impacting India’s MSME sector, with a specific lens on early indicators in credit portfolios.
India’s MSMEx (Micro, Small, Medium Exposure Businesses’) credit exposure stood at approximately ₹46 lakh crore as of April 2026, accounting a 12.8% YoY growth, supported by asset quality gains, diversified geographic and sectoral participation, and targeted policy measures including credit guarantee and liquidity schemes. However, between December 2025 and April 2026, POS growth slowed to 3.1% compared to 9.7% in the prior year, while active loans declined by 3.5%, indicating the early impact of global geopolitical uncertainties into domestic MSMEx credit supply.
Key Highlights:
Growth Continues but Progress Slows Down Across Segments
While overall credit expansion remains intact, all borrower segments ranging from micro, small, and medium have witnessed a slowdown. At the segment level, the micro credit segment, which accounts for ~86% of active loans, saw a degrowing in both POS (–3.1%) and active loans (–4.6%) between December 2025 and March 2026, though some stabilization was visible by Apr 2026.
Manufacturing and Trade Sectors Accounts with High POS Share
Manufacturing and trade, contributing over 60% of POS share, witnessed a slowdown between Dec 2025 and Apr 2026. Manufacturing growth moderated to 4.3% from 10.4% last year, while sectors such as shipping & transport, food processing, and auto & ancillaries recorded moderate POS declines (although from a small base) amid global uncertainties. Early-stage delinquencies in manufacturing also rose slightly from 1.6% to 1.8% between Mar 2026 and Apr 2026. However, these movements may also reflect cyclical factors and merit ongoing observation to gauge their persistence.
Lending Activity Moderates Across All Lender Types
Over the last two years, PSU banks have ceded share to NBFCs and other lenders.
All lender categories have seen sharper slowdowns, accounting NBFCs (-1.6%) between December 2025 – March 2026 vs (+6.4%) last year and PSU banks witnessing a contraction of (–0.2%) vs. (+3.5%) last year. While private banks continue to lead in portfolio share, overall credit expansion has now become more cautious across the lending ecosystem.
Working Capital Trends and Product Mix Remain Stable but Monitorable
Term loans constitute ~50% of MSMEx POS, with the remainder split across working capital–cash credit and overdraft. Working capital utilization peaked at ~73% (cash credit) and ~70% (overdraft) in Mar’26, remaining a key monitorable. Whereas, overall portfolio health remains stable, with PAR 90+ improving slightly YoY. However, early-stage delinquency (PAR 31–90) is inching up in specific segments between Mar’26 and Apr’26 such as manufacturing (rose from 1.6% to 1.8%), PSU banks (increased from 2.7% to 3.0%), and cash credit products (increased from 1.6% to 1.9%), emerging as early-warning indicators from this crisis period. Additionally, the micro segment continues to have higher early delinquency (PAR 31-90) at 2.7% as of Apr’26 as compared to the small and medium business segments.
Regional and Borrower Behaviour Trends Show Mixed Signals
Western and southern regions continue to dominate exposure, contributing over 60% of total POS. However, growth momentum is now led by northern and southern regions. Borrowers with multiple active loans accounts for nearly 70% of POS and continue to demonstrate better delinquency outcomes compared to single-loan borrowers.
Overall, the report highlights that while India’s MSME sector continues to demonstrate resilience, early signs of moderation are beginning to emerge across credit growth, lending activity, and select borrower segments amid ongoing geopolitical uncertainties. The findings underline the need for continued monitoring of early-warning indicators amidst the sustained policy support to ensure stable credit flow and long-term sectoral growth.