Tamil Nadu Ranks Second Largest Market for Small Business Loans

Tamil Nadu ranks as the second-largest market for small business loans, according to a report

Last updated on September 8, 2025September 8, 2025 by RS Web Solutions on Categories Business

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Tamil Nadu Emerges as a Key Player in Small Business Credit Market

A recent report from the Small Industries Development Bank of India (SIDBI) and credit bureau CRIF High Mark highlights Tamil Nadu’s prominence in the small business credit sector, accounting for 9.3% of the nation’s total.

As of June 30, 2025, the state boasts a small business credit portfolio valued at approximately ₹4.21 lakh crore, reflecting a robust year-on-year growth of 15.7%, up from ₹3.64 lakh crore the previous year.

Maharashtra continues to lead the market with an impressive ₹6.0 lakh crore in outstanding credit. Following Tamil Nadu, Gujarat holds ₹3.69 lakh crore, Uttar Pradesh ₹3.61 lakh crore, and Karnataka ₹3.18 lakh crore, completing the top five states by portfolio size.

Notably, Uttar Pradesh recorded the highest growth in outstanding portfolios, marking an increase of 20.7% on a year-on-year basis.

Defining Small Businesses

The report categorically defines “Small Business” as enterprises with a total credit exposure not exceeding ₹5 crore from formal lending institutions. The analysis encompasses three distinct borrower segments: Enterprises, Sole Proprietors with Entity Presence, and Sole Proprietors.

A pair of scissors sitting on top of a pile of money

Enterprises: This segment includes borrowings made under the name of a business entity.
Sole Proprietors: Self-employed individuals securing business-type loans under their personal names.
Sole Proprietors with Entity Presence: Borrowers who have obtained business loans both personally and through their business entity.

Maharashtra dominates in terms of portfolio outstanding and market share across all borrower categories, as per the findings of the study.

Tamil Nadu’s Standing in Specific Categories

In the segments of Sole Proprietors and Sole Proprietors with Entity Presence, Tamil Nadu ranks second with contributions of 11% and 8.8% respectively. In contrast, it holds a share of 7.9% in the Enterprises segment, while Gujarat leads at 9.7%.

Interestingly, urban centers such as Bengaluru (15.6%) and Hyderabad (18.2%) command substantial shares of their respective state portfolios. In juxtaposition, Chennai has a relatively modest contribution of just 10.6% to Tamil Nadu’s small business credit portfolio by June 30, 2025.

Loan Performance Metrics

Regarding loan performance, Tamil Nadu’s Portfolio at Risk (PAR) for loans overdue by 91 to 180 days stood at 1.7% as of June 2025. On a national scale, this figure decreased to 1.5%, down from 2.0% recorded in June 2023.

Published – September 08, 2025 10:55 am IST

Source link: Thehindu.com.

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