Rajasthan’s small-business credit boom: Why lending is growing faster than the national average

Rajasthan has emerged as one of India’s stronger small-business credit markets, with lending growth outpacing the national average while maintaining relatively healthy asset quality, according to the fifth edition of the CRIF-SIDBI Small Business Spotlight Report, released on October 8.

The state’s small-business credit portfolio stood at ₹3.4 lakh crore in June 2026, accounting for 6.8% of India’s overall small-business credit. The portfolio grew 16.8% year-on-year, compared with 14.9% growth nationally.

Rajasthan vs India

The report attributes Rajasthan’s performance to its diversified economy, large MSME base and sustained policy support. The state had more than 53 lakh registered MSMEs, according to the report.

A key driver of the expansion is the growing role of sole proprietors. Across India, their portfolio increased 19.3% YoY, while active loans jumped 27.4%, indicating that credit access is widening rather than growth being driven solely by larger exposures.

Overall small-business credit reached ₹50.9 lakh crore nationally in June 2026, up 14.9% YoY.

Rajasthan’s credit growth is also becoming more diversified. Manufacturing accounts for 45.4% of enterprise exposure, higher than the roughly 42% national share. However, services are now expanding faster, recording 15.6% YoY growth. Machinery and equipment emerged as the strongest-performing manufacturing industry, combining portfolio growth with improving delinquency trends.

What is driving Rajasthan’s credit growth?

The expansion is also spreading beyond established business centres. Sikar and Nagaur are growing materially faster than the state average, suggesting a more dispersed pattern of small-business activity across the state.

Importantly, faster lending has not so far translated into a deterioration in portfolio quality. Rajasthan’s PAR 91–180 stood at 0.9%, below the national 1.2%. The state also has a stronger borrower risk profile, with 77.3% of enterprise exposure classified in low-risk categories, compared with 70.9% nationally.

The broader national picture is similarly supportive: overall PAR 91–180 improved to 1.2% from 1.5% a year earlier, although the rise in very-high-risk exposure among sole proprietors underlines the need for continued risk monitoring.

Overall, the CRIF-SIDBI findings suggest Rajasthan is combining faster credit expansion with relatively strong repayment performance, as formal credit penetration deepens across established and emerging MSME centres.