New Delhi [India], December 25 (ANI): Private banks continue to dominate enterprise lending to small businesses in India, closely followed by public sector banks (PSBs), though the latter have seen a decline in their market share over the past two years, according to a report by Small Industries Development Bank of India (SIDBI) and CRIF High Mark, India's first full-service credit information bureau.

The report noted that while private banks remain the primary lenders to enterprises, non-banking financial companies (NBFCs) are steadily gaining share, particularly among sole proprietors, where they now command over 41 per cent of the lending share.

In the study, 'small business' is defined as enterprises with an aggregated credit exposure of not more than Rs 5 crore from the formal lending system.

It stated, 'As of Sep'25, private banks remain the primary lenders to enterprises, though their share shows minor volatility. Public sector banks follow closely, but their share declined from 39.3 per cent in Sep'23 to 37.8 per cent in Sep'25.'

The report highlighted that the reduced share of PSBs has largely been absorbed by NBFCs, reflecting a gradual shift in the lending landscape.

Aggregate credit exposure to small businesses reached Rs 46 lakh crore as of September 2025, registering a robust 16.2 per cent year-on-year growth. On a quarter-on-quarter basis, growth stood at 1.5 per cent. Active loan accounts also rose strongly, increasing 11.8 per cent year-on-year to 7.3 crore accounts.

The report attributed this sustained momentum to comprehensive policy initiatives for the MSME (Micro, Small, and Medium Enterprises) sector, including the implementation of several government-backed credit schemes, which have played a pivotal role in supporting credit expansion.

However, the pace of growth has moderated compared to the previous quarter, when year-on-year growth stood at 19.3 per cent. This moderation may reflect more cautious underwriting by lenders as well as seasonal variations, the report said.

Despite this, the faster growth in credit outstanding compared to loan volumes indicates steady expansion in average ticket sizes.

In terms of product mix, working capital loans dominate enterprise lending, accounting for around 57 per cent of the portfolio outstanding, while term loans continue to support capital expenditure needs. For sole proprietors, loans against property (LAP) form the largest component, followed by business loans and commercial vehicle loans.

The report also shared that the unsecured lending also recorded strong momentum, with unsecured loans growing 31 per cent year-on-year despite concerns around stress in certain segments. (ANI)