The West Asia conflict, now stretching beyond a month, has begun to worry banks about the vulnerability of small borrowers, particularly SMEs and MSMEs. Banks have shifted to a more structured and cautious lending mode as early signs of stress among small borrowers intensify, prompting lenders to reassess their exposure even before the full impact of the war plays out. Borrowers are now being evaluated through four distinct lenses – temporary damage with recovery ability, permanent damage but backed by strong corporate or industrial groups, permanent damage with weak balance sheets, and temporary damage with low resilience.