The report reveals that individual borrowers now account for 28 per cent of outstanding commercial balances, while loans to entities constitute the remaining 72 per cent. Between March 2023 and March 2026, individual borrower balances expanded 1.8 times, significantly outpacing the 1.5 times growth observed in entity borrower balances during the same period.
“India’s commercial credit market is seeing a shift in borrower composition, with individual borrowers with business-oriented loans now forming a meaningful share of overall commercial credit balances,” the report stated. This evolution underscores the growing importance of individual entrepreneurs in driving formal credit demand.
As of March 2026, approximately 2.8 crore individual borrowers held active business-oriented loans. Notably, 43 per cent of these were classified as early-stage commercial entities with less than 24 months of credit history, highlighting the influx of newer market participants.
Non-Banking Financial Companies (NBFCs) have played a particularly prominent role in serving this segment. Nearly half (48 per cent) of NBFCs’ total commercial balances pertained to individual borrowers. Private banks followed as the second largest contributor at 24 per cent of the commercial balance share among individual borrowers. Other lender categories showed comparatively lower engagement with this group.
The individual borrower segment has gained visibility across major commercial credit products. Loans against property represent the largest share of outstanding balances for this group, followed by commercial vehicle loans and unsecured business loans. At a product level, individual borrowers accounted for 68 per cent of loans against property balances, 76 per cent of commercial vehicle balances, and 67 per cent of unsecured business loan balances.
Collectively, loans against property, commercial vehicle loans, unsecured business loans, term loans, overdraft, and cash credit together comprised roughly 87 per cent of outstanding commercial credit balances, indicating concentrated demand in these key areas.
Bhavesh Jain, MD & CEO, TransUnion CIBIL, emphasised the significance of this trend. He noted that individual business borrowing forms an integral part of how commercial credit is evolving and deserves focused understanding within the broader MSME credit ecosystem.
“As MSMEs grow, their credit needs also change, from small-ticket working capital to larger, sector-led funding requirements. The real opportunity for the credit ecosystem lies in understanding this progression with greater clarity, especially as borrowers move from individual business borrowing to entity-level credit, or from trade-led borrowing to manufacturing-led expansion,” Jain added.
The report also observed a moderation in the onboarding of first-time borrowers. The share of new-to-credit (NTC) entities in origination volumes declined from 52 per cent in FY23 to 42 per cent in FY26, suggesting a maturing credit market where repeat and established borrowers are gaining prominence.
This data paints a picture of an evolving commercial credit market where individual entrepreneurs are increasingly accessing formal finance to fuel their business aspirations. The faster growth in individual borrower balances reflects both the entrepreneurial spirit driving India’s economy and the expanding reach of financial institutions toward smaller business owners.
As the MSME sector continues to play a pivotal role in employment generation and economic growth, insights from this report could help lenders, policymakers, and other stakeholders better tailor products and strategies to support the unique needs of individual business borrowers while facilitating their progression to more structured entity-level financing.
The findings highlight the dynamic nature of India’s credit market and the critical importance of monitoring shifts in borrower profiles to ensure sustainable and inclusive credit growth in the coming years.
