New Delhi, March 19: The demand for loans from the Micro, Small, and Medium Enterprises (MSME) sector is expected to remain robust. According to a report, India’s total loan growth for the fiscal year 2026 could reach approximately ₹26 lakh crore, marking a year-on-year increase of about 14.3 percent.
A joint report by ICRA Limited and ASSOCHAM predicts that loan growth for fiscal year 2027 will slightly decrease to between 11.3 and 12 percent, translating to an increase of around ₹23.5 to ₹25 lakh crore.
The report indicates that this decline is not due to weakened demand but rather a return to normalcy following last year’s high base.
However, significant challenges in accessing finance for the MSME sector continue to limit its growth. The report suggests that the overall increase in bank loans is likely to remain stable, with the MSME and retail sectors being the primary drivers of new growth.
Saurabh Sanyal, Secretary General of ASSOCHAM, emphasized the necessity of making loans easily accessible to MSMEs to promote inclusive development and ensure that the benefits of economic growth reach all sectors.
K. Ravichandran, Executive Director of ICRA Limited, noted that India’s financial system has become more robust and stable compared to previous years, but there is a need for a shift beyond traditional lending approaches in changing circumstances.
The report forecasts that strong demand for loans will persist due to improved economic activities, better financial conditions for companies, and increased formalization.
The MSME sector plays a crucial role in economic growth, particularly in urban and semi-urban areas, by expanding supply chains and integrating small businesses into formal systems.
According to the report, initiatives related to formalization, improved classification, and government policies have made it easier for lending institutions to assess borrowers, thereby increasing access to loans.
Despite this progress, the report highlights that a significant structural credit gap still exists within the MSME sector. Diverse risk profiles, a lack of adequate guarantees, and insufficient transparency hinder timely and adequate loan access for small businesses, especially those not fully integrated into the formal system.
Arpit Soni has had a passion for journalism since the beginning. Now he has turned this hobby into his profession. Arpit, who is a resident of Udaipur, enjoys editing and writing news related to journalism. He has worked as a Senior Content Producer in several important roles at Bhaskar, Patrika, Pratahkal, Punjab Kesari, and Times. Arpit completed his schooling in Udaipur and Jaipur. He has been working in the media industry for more than 10 years, and his journey is still continuing. ✍️📚
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