Tamil Nadu has secured its position as the second-largest small business credit market in India, with a credit portfolio of ₹4.21 lakh crore as of June 30, 2025. This marks a 15.7% year-on-year growth, up from ₹3.64 lakh crore in June 2024, according to a joint report by SIDBI and CRIF High Mark.
The state accounts for 9.3% of the country’s total small business credit, trailing only Maharashtra, which leads with ₹6.0 lakh crore in outstanding loans.
Small Businesses: Defined and Tracked
The study defines “small businesses” as those with total credit exposure not exceeding ₹5 crore from formal lending institutions. Borrowers are further categorised into:
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Enterprises (entity-level borrowing)
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Sole Proprietors with Entity Presence
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Sole Proprietors (individual borrowing for business use)
Maharashtra dominates across all categories, but Tamil Nadu ranks second in both Sole Proprietors (11%) and Sole Proprietors with Entity Presence (8.8%). For Enterprises, Tamil Nadu holds a 7.9% share, with Gujarat leading at 9.7%.
Urban Credit Penetration and Risk Metrics
Interestingly, while Tamil Nadu boasts a large portfolio, Chennai contributes just 10.6% to the state’s small business credit portfolio—less than urban hubs like Bengaluru (15.6%) and Hyderabad (18.2%) in their respective states.
In terms of loan performance, Tamil Nadu’s Portfolio at Risk (PAR) for loans overdue by 91–180 days stood at 1.7% as of June 2025. This is slightly above the national average of 1.5%, which has improved from 2.0% in June 2023.
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Sectoral Strength and Growth Potential
The report underscores Tamil Nadu’s resilience and sustained growth in small business lending, driven by strong industrial presence, a diversified MSME base, and robust policy frameworks. With rising credit demand and relatively healthy loan performance, the state is poised to play a central role in the next phase of MSME-led economic expansion.