Indian banks have turned cautious on lending to small businesses as early signs of stress emerge in the micro, small and medium enterprises (MSME) segment, prompting tighter underwriting and a moderation in credit growth, showed a report by 360 ONE Capital citing a CRIF High Mark report. MSME loan growth slowed to 12.7% year-on-year in April 2026 from around 18%-20% seen in previous quarters, as lenders reassessed risk and curtailed fresh disbursals, data from CRIF High Mark showed. The slowdown was sharper in active loans, which advanced just 2.5% year-on-year compared with 6%-9.4% earlier, indicating a more cautious stance by lenders, the CRIF High Mark report showed.