India's micro, small and medium enterprises (MSME) loan segment is showing early signs of stress, with delinquency levels inching up in April 2026 even as banks remain cautious about the potential impact of supply-chain disruptions and rising input costs linked to the West Asia conflict, according to a sector update report by 360 ONE Capital.
The report noted that while the impact of the conflict has not yet materially reflected in banks' asset quality, lenders are increasingly concerned about the second-order effects on MSME borrowers.
