Chandigarh, July 15: India’s MSME financing landscape is undergoing a structural shift. While working capital once dominated credit demand, businesses today are increasingly seeking finance to expand operations, invest in technology, enhance capacity and access new markets. According to Aditya Birla Capital (ABC), this reflects growing confidence among Indian entrepreneurs despite geopolitical uncertainties, supply chain disruptions and commodity price volatility.
As per the latest SIDBI–TransUnion CIBIL MSME Pulse Report, consolidated MSME credit outstanding expanded 16% year-on-year to ₹67.6 lakh crore as of December 2025, significantly outpacing overall bank credit growth of 11% in FY2024–25, according to CRISIL. With an MSME loan book of over ₹91,000 crore, the largest among private diversified NBFCs ABC says financing demand increasingly reflects business ambition rather than immediate liquidity needs.
“The financing demand we are seeing today is not merely about credit needs; it reflects confidence,” says Rakesh Singh, Executive Director and Chief Executive Officer (NBFC) at Aditya Birla Capital Limited. “Businesses are investing in expansion, technology adoption, formalisation and market access. MSMEs are becoming more agile, digitally connected and increasingly willing to embrace formal financial solutions.”
The shift is also changing what businesses expect from lenders. Speed of credit, solution-driven engagement, and faster decision-making have become key priorities, supported by greater formalisation, improved credit discipline and the growing availability of GST data, banking transaction data and digital business footprints. In response, ABC has evolved from being a traditional lender to building a more data-driven and customer-centric financing platform.
“As customer expectations continue to evolve, our role is also evolving from being a lender to becoming a long-term financial partner for businesses,” Singh says.
Recognising that MSMEs have different financing needs at different stages of growth, ABC has built a full-stack portfolio spanning business expansion, capacity enhancement, working capital management, and secured and unsecured lending solutions. Central to this is Udyog Plus, the company’s end-to-end digital platform, which enables paperless applications, faster disbursals and simplified access to finance with minimal documentation.
The company’s lending model also includes unsecured business loans, supply chain financing and secured lending solutions, supported by technology-enabled underwriting and Digital Public Infrastructure (DPI) to improve turnaround times. Backed by more than 465 branches, an extensive channel partner network and digital capabilities, ABC continues to expand access to formal finance across Tier II cities and beyond.
Policy reforms and digital infrastructure have further aided the evolution of MSME lending. GST has strengthened business formalisation, while initiatives such as the Account Aggregator framework, Trade Receivables Discounting System (TReDS), and government-backed programmes including Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and Emergency Credit Line Guarantee Scheme (ECLGS) have improved access to formal, collateral-free credit. At the same time, ABC believes greater digital inclusion, stronger alternative credit assessment models and improved financial awareness remain essential to expanding credit access, particularly among underserved enterprises.
Looking ahead, the company sees embedded finance and the Unified Lending Interface (ULI) as the next frontier in MSME lending. By integrating finance into business workflows and enabling consent-based access to verify financial information, these innovations have the potential to make credit faster, more accessible and better aligned with the needs of India’s small businesses.
“India is uniquely positioned in the current global environment. A large domestic market, increasing formalisation, digital infrastructure, GST-driven transparency and supportive policy initiatives are creating a strong foundation for sustained growth. From our perspective, MSMEs are not just a lending segment; they represent one of the country’s most significant long-term growth opportunities,” says Singh.