MSME Loan Disbursement in India: 2025 Overview

India’s small enterprises, known as MSMEs, are vital for job creation and economic growth, with loans playing a crucial role in their expansion.

In 2025, the nation allocates 75.60 thousand crore INR in loans to MSMEs, marking a 17.8% increase from the previous year.

Presented tables illustrate this financial distribution across all 28 states and 8 union territories, one detailing total disbursements in thousand crore and the other presenting percentage shares.

Some states receive substantial amounts, while others are left with minimal funds.

Total Loan Disbursement: Larger States Receive the Majority

Rank	State/Union Territory	Loan Disbursement (Thousand Crore INR)
1	Maharashtra	11.50
2	Tamil Nadu	10.20
3	Gujarat	9.80
4	Uttar Pradesh	8.70
5	Karnataka	7.50
6	Delhi	6.50
7	Rajasthan	5.40*
8	West Bengal	5.20*
9	Andhra Pradesh	4.80*
10	Telangana	4.50
11	Haryana	4.20*
12	Punjab	3.90*
13	Madhya Pradesh	3.60*
14	India (National Total)	75.60
15	Kerala	3.20*
16	Odisha	2.80*
17	Chhattisgarh	2.50*
18	Jharkhand	2.20*
19	Bihar	2.00*
20	Uttarakhand	1.80*
21	Himachal Pradesh	1.50*
22	Assam	1.40*
23	Jammu and Kashmir	1.20*
24	Goa	0.90*
25	Chandigarh	0.80*
26	Puducherry	0.70*
27	Tripura	0.60*
28	Manipur	0.50*
29	Meghalaya	0.45*
30	Nagaland	0.40*
31	Arunachal Pradesh	0.35*
32	Mizoram	0.30*
33	Sikkim	0.25*
34	Andaman and Nicobar Islands	0.20*
35	DNHDD (Dadra and Nagar Haveli and Daman and Diu)	0.15*
36	Ladakh	0.10*
37	Lakshadweep	0.05*

The first table organizes states according to their loan disbursement in thousand crore INR.

Maharashtra ranks first with 11.50 thousand crore, followed by Tamil Nadu (10.20), Gujarat (9.80), Uttar Pradesh (8.70), and Karnataka (7.50).

Smaller regions such as Lakshadweep (0.05), Ladakh (0.10), and the Andaman and Nicobar Islands (0.20) receive the least funding.

Maharashtra’s leading position is attributed to its industrial centers like Mumbai, where MSMEs in manufacturing and technology secure significant loans.

Tamil Nadu’s 10.20 thousand crore reflects the needs of Chennai’s automotive and textile industries, which require financing for equipment.

Gujarat’s 9.80 thousand crore is linked to Surat’s diamond industry and Ahmedabad’s chemical sector, where small businesses rely heavily on credit.

What accounts for the lower funding in smaller regions? Lakshadweep’s 0.05 thousand crore corresponds to its small population (64,000) and limited number of MSMEs, primarily in the fishing sector.

Ladakh’s 0.10 thousand crore is a result of its remote location, which makes banks reluctant to provide loans.

Percentage Share: Who Receives the Largest Portion?

Rank	State/Union Territory	Percentage Share in Loan Disbursement (%)
1	Maharashtra	15.21
2	Tamil Nadu	13.49
3	Gujarat	12.96
4	Uttar Pradesh	11.51
5	Karnataka	9.92
6	Delhi	8.60
7	Rajasthan	7.14*
8	West Bengal	6.88*
9	Andhra Pradesh	6.35*
10	Telangana	5.95
11	Haryana	5.56*
12	Punjab	5.16*
13	Madhya Pradesh	4.76*
14	Kerala	4.23*
15	Odisha	3.70*
16	Chhattisgarh	3.31*
17	Jharkhand	2.91*
18	Bihar	2.65*
19	Uttarakhand	2.38*
20	Himachal Pradesh	1.98*
21	Assam	1.85*
22	Jammu and Kashmir	1.59*
23	Goa	1.19*
24	Chandigarh	1.06*
25	Puducherry	0.93*
26	Tripura	0.79*
27	Manipur	0.66*
28	Meghalaya	0.60*
29	Nagaland	0.53*
30	Arunachal Pradesh	0.46*
31	Mizoram	0.40*
32	Sikkim	0.33*
33	Andaman and Nicobar Islands	0.26*
34	DNHDD (Dadra and Nagar Haveli and Daman and Diu)	0.20*
35	Ladakh	0.13*
36	Lakshadweep	0.07*

The second table illustrates the share of each state in the national total.

Maharashtra holds 15.21%, followed by Tamil Nadu at 13.49%, Gujarat at 12.96%, Uttar Pradesh at 11.51%, and Karnataka at 9.92%.

The smallest shares are attributed to Lakshadweep (0.07%), Ladakh (0.13%), and the Andaman and Nicobar Islands (0.26%).

Maharashtra’s 15.21% share is bolstered by its significant number of MSMEs, which account for 13% of the national total, along with robust banking institutions such as SBI.

Tamil Nadu’s 13.49% is linked to its textile and automotive industries, which benefit from loans provided through initiatives like PMMY.

Gujarat’s 12.96% is a result of its favorable business policies, including accessible credit for the gem industry in Surat.

The small territories exhibit minimal shares due to a lower number of businesses.

Lakshadweep’s 0.07% share arises from its limited MSME presence, primarily consisting of informal fishing enterprises that are often overlooked by banks.

What Causes the Disparities? Key Factors

Several elements contribute to the uneven distribution of loans to MSMEs:

MSME Concentration: Maharashtra receives 11.50 thousand crore directed towards its 13% of India’s MSMEs, predominantly located in Mumbai’s manufacturing sector.

In contrast, Lakshadweep’s 0.05 thousand crore corresponds to its nearly non-existent MSME base, as fishing does not typically require substantial loans.

Economic Strength: Gujarat’s 9.80 thousand crore is derived from its robust GDP and industrial parks, which attract banking institutions.

Conversely, Bihar’s 2.00 thousand crore is hindered by poverty, rendering MSMEs more precarious for lenders.

Government Initiatives: The PMMY program allocates 4.14 lakh crore in FY25 (PIB, 2025), facilitating Uttar Pradesh’s 8.70 thousand crore through accessible loans.

Remote regions such as Nagaland (0.40 thousand crore) receive less funding due to the limited reach of these schemes.

Urban-Rural Disparity: Urban states like Delhi (6.50 thousand crore, 8.60% share) enjoy superior access to banking services.

In contrast, rural states like Jharkhand (2.20 thousand crore, 2.91% share) encounter fewer banking branches, which hampers loan distribution.

Credit Demand: Karnataka’s 7.50 thousand crore is linked to the funding needs of tech MSMEs in Bengaluru for their expansion.

Smaller territories like Ladakh (0.10 thousand crore) experience low demand, as tourism does not necessitate large loans.

Progress and Challenges

India’s MSME loans are projected to increase by 11% annually, reaching 28.2 lakh crore by 2023 (TransUnion CIBIL-SIDBI, 2024), supported by initiatives such as CGTMSE that provide credit guarantees.

States such as Maharashtra exemplify how a focus on industrial development can enhance loan disbursements. However, challenges remain.

Bihar’s allocation of 2.00 thousand crore indicates a low level of MSME registrations (with a total of 5.70 crore on the Udyam Portal), while remote regions like Mizoram, receiving only 0.30 thousand crore, encounter elevated interest rates due to perceived risks.

Source

• Ministry of Finance, Government of India. (2024). Economic survey 2023-24.
• Reserve Bank of India. (2023). Credit to MSME sector 2023.