Maharashtra Industries Minister Uday Samant has confirmed that over 12,000 micro, small and medium enterprises (MSMEs) closed down in the state over the last four years, responding to questions in the legislative assembly. As per NDTV Profit, Samant told the assembly that the report was "partially true" when asked by BJP MLA Sudhir Mungantiwar about closures due to slowdown, adverse conditions post-COVID-19, and hikes in fuel and electricity prices. The minister cited the conflict in West Asia as one of the factors contributing to the closures, while claiming that the state government took measures to revive closed industrial units under the industrial policy announced in December 2025. The government is extending various incentives to industries as part of efforts to support the MSME sector and encourage industrial revival.
The Reserve Bank of India's Financial Stability Report has flagged nascent stress in micro enterprises within the MSME segment, despite overall asset quality remaining benign. While the gross NPA ratio in the MSME segment has shown improvement, the central bank has identified emerging challenges that require close monitoring. The report emphasizes that exposure to micro enterprises and retail segments requires close monitoring as risks to asset quality could increase, especially if overall economic conditions weaken due to the West Asia conflict and affect borrower cash flows. This warning comes alongside the robust 15% credit growth to MSMEs in FY26, which nearly doubled from 8.2% a year ago, as reported by the latest official data.
The credit growth was broad-based across sectors, with services leading at 19% growth compared to 12% in the previous year, driven by demand from NBFCs, trade, and commercial real estate segments. Credit to agriculture and allied sectors grew by 15.7% during FY26, up from 10.4% in the previous year, supported by sustained rural demand and improved access to formal credit. Personal loans witnessed steady growth of 16.2%, up from 11.7% last year, with strong demand for vehicle loans and loans against gold jewellery. The industrial sector showed significant improvement with credit growth nearly doubling to 15% from 8.2% a year ago. However, the RBI's report highlights that gross NPA ratios in secured and unsecured retail loans stood at 0.7% and 1.7% respectively as of end-March 2026, requiring continued monitoring.
The banking sector faces emerging funding pressures as banks' liability profile shifts from low-cost current and savings account (CASA) deposits to higher-cost term deposits and certificates of deposit (CDs), increasing the marginal cost of funds. The relationship between CASA deposits and interest rates has weakened compared with previous rate cycles, reflecting a shift in household savings towards higher-yielding investment avenues. As a result, banks' deposit franchise is coming under pressure, which could affect profitability as competition for household savings intensifies. However, the RBI notes that banks are expanding credit to higher-yielding segments, such as MSMEs and retail, which is helping to protect their margins at a time when the share of low-cost loans is shrinking. The central bank has observed that banks that meaningfully increased their MSME and retail lending experienced relatively muted pressure on net interest margins.
Household debt continued to rise, reaching 45.5% of gross domestic product (GDP) at the end of September 2025, with non-housing retail loans accounting for 58.4% of total household borrowings as of March 2026. Borrowings for consumption purposes constituted nearly half of household debt, followed by loans for productive purposes, while loans for asset creation grew at a slower pace. The report also points to a significant change in banks' housing loan portfolios, with the share of loans of ₹50 lakh and above increasing to 44.7% of outstanding housing credit as of March 2026 from a portfolio previously dominated by loans below ₹25 lakh. Despite this shift towards larger-ticket loans, asset quality remained stable, with the gross non-performing asset ratio in housing loans declining to 0.5% in March 2026 from 1.2% in March 2019.
