India's credit market continues to remain resilient despite geopolitical tensions in West Asia, with rising average loan ticket sizes helping sustain overall credit growth, according to credit bureau CRIF India Chairman and Regional Managing Director, India and South Asia, Sachin Seth. However, the pace of fresh loan disbursement moderates in segments such as MSMEs and microfinance. He also emphasized that India is unlikely to face any impact on the credit cycle as a trickle down impact of the West Asia crisis, even in the coming quarters.
"There are no major signs of rising defaults or delinquencies in the retail or MSME sectors from the West Asia crisis. Although lenders are closely monitoring vulnerable sectors like export oriented units, food chains, logistics etc with high dependence on critical supply chain inputs and export dependency," said Sachin Seth, Chairman and Regional Managing Director, India and South Asia, CRIF India.
"India's credit growth remains strong, driven by steadily increasing loan ticket sizes despite a moderation in the number of originations across MSME and microfinance segments. Lenders are closely monitoring vulnerable sectors like export-oriented units, food chains and logistics with high dependence on critical supply chain inputs and exports. However, better data insights, potential geopolitical resolutions and robust government support, including the proposed ECLGS 5.0 scheme, are expected to shield India's credit growth cycle from any significant impact," Seth said.
CRIF India's latest report shows that while India's MSME credit portfolio has remained resilient, while the growth has moderated slightly amid global uncertainties. The MSME portfolio outstanding rose 12.8% year-on-year to around Rs 46 lakh crore in April 2026, with improved asset quality. However, growth slowed sharply to 3.1% between December 2025 and April 2026 from 9.7% a year earlier, while active loans declined 3.5%. However, it cautioned about the emerging stress in the micro-enterprise segment, where early-stage delinquencies remain elevated, and in manufacturing subsectors such as food processing, auto ancillaries, and shipping and transport.
“There are areas like slower portfolio growth, stress in select subsectors and lender groups, and rising early stage delinquencies in certain borrower segments - that lenders and policymakers may need to observe closely,” cautioned the report.
Total retail credit outstanding went up by 16.6% year-on-year to Rs 170.2 lakh crore in March 2026, with gold loan emerging as the fastest-growing retail segment, with outstanding loans surging 50.4% year-on-year to Rs 18.6 lakh crore, making it the second-largest retail asset class after home loans.