Tamil Nadu second biggest market for small business credit: study

Tamil Nadu is the second biggest market for small business credit, accounting for 9.3% of the national total, as per a joint report by Small Industries Development Bank of India (SIDBI) and credit bureau CRIF High Mark.

As of June 30, 2025, Tamil Nadu had an outstanding small business credit portfolio of about ₹4.21 lakh crore, up 15.7% from ₹3.64 lakh crore as of June 30 2024, the report said.

Maharashtra remained the largest market with ₹6.0 lakh crore in outstanding credit, while Tamil Nadu, Gujarat (₹3.69 lakh crore), Uttar Pradesh (₹3.61 lakh crore), and Karnataka (₹3.18 lakh crore) round out the top five by portfolio size. Uttar Pradesh registered highest outstanding portfolio growth of 20.7% on a year-on-year basis.

The report defines “Small Business” as those businesses that have an aggregated credit exposure not exceeding ₹5 crore from the formal lending system. The study analyses there borrower segments- namely- Enterprises, ‘Sole Proprietors with Entity Presence’ and Sole Proprietors.

The enterprises segment includes borrowings availed in the name of a trade or business entity. Sole Proprietors comprises self-employed individuals who have availed business-type loans in their personal names. Sole Proprietors with Entity Presence includes borrowers who have availed business purpose loans both in their personal capacity and in the name of their trade or business.

Maharashtra leads in portfolio outstanding and share across all borrower segments, the study said.

Tamil Nadu is second in the Sole Proprietors and Sole Proprietors with Entity Presence borrower segment with a share of 11% and 8.8% respectively. In terms of Enterprises borrowers segment- Tamil Nadu had a share of 7.9%, with Gujarat in the second position with a share of 9.7%, the study said.

Interestingly, the report said while cities such as Bengaluru (15.6%) and Hyderabad (18.2%) account for a significant share of their respective state portfolios, Chennai contributes relatively less-only 10.6% of Tamil Nadu’s outstanding small business credit portfolio as of June 30, 2025.

Overall, for Tamil Nadu PAR 91–180, which represents loans that are between 91 to 180 days past due, remained at 1.7% as on June 2025. Nationally, PAR 91–180 declined to 1.5% in June 2025from 2.0% in June 2023, the study said.