Credit Saison India is sharpening its strategy in the fast-growing MSME credit market by increasing the share of secured loans in its portfolio, a move that underscores both the opportunity and the discipline now shaping India's non-bank lending landscape. The company expects secured loans to account for 30% of its total book by the end of FY27, up from a lower current mix, as it leans more heavily into collateral-backed lending in Tier 2 and Tier 3 towns.
The shift comes at a time when lenders serving small businesses are balancing growth with asset quality. MSMEs remain a critical engine of employment and local commerce across India, but the segment is also more vulnerable to cash-flow volatility, delayed payments and uneven credit histories. By increasing the secured component of its book, Credit Saison India is signalling a preference for more resilient underwriting as it scales.
Secured Lending Shift
The company's current loan book stands at around Rs 25,000 crore, giving it a sizeable base from which to recompose its portfolio. Rather than relying solely on unsecured exposure, Credit Saison India is broadening its product mix to include more loans backed by collateral, a structure that typically offers lenders stronger recovery prospects and lower loss severity in the event of stress.
For a lender focused on MSMEs, the move is strategically significant. Secured lending can improve risk-adjusted returns, particularly in segments where borrower cash flows are seasonal or tied to local demand cycles. It can also help lenders extend credit to businesses that may not qualify for larger unsecured limits but do have tangible assets to pledge.
The emphasis on secured loans does not imply a retreat from MSME financing. Instead, it reflects a recalibration of how growth is being pursued. In India's evolving credit market, lenders are increasingly expected to combine scale with tighter risk controls, especially as competition intensifies and regulators keep a close watch on portfolio quality.
Tier 2, Tier 3 Focus
Credit Saison India's expansion is being driven in part by opportunities beyond the country's largest metros. Tier 2 and Tier 3 towns have become important demand centres for formal credit as small enterprises modernise operations, expand working capital needs and seek alternatives to informal borrowing.
These markets are attractive because they remain underpenetrated relative to larger urban centres, yet they also require more granular distribution and local relationship-building. That is where branch expansion becomes central to the company's plan. By opening more branches across the country, Credit Saison India aims to deepen origination, improve borrower access and strengthen on-the-ground underwriting.
Branch-led growth remains relevant in MSME finance despite the rise of digital lending tools. In smaller towns, physical presence can still matter for trust, documentation, collections and relationship management. For lenders, a wider branch footprint can also support better credit assessment by bringing teams closer to local business ecosystems.
The strategy suggests Credit Saison India is positioning itself for a more durable expansion cycle rather than a purely digital, asset-light push. That may help it compete in a market where borrowers increasingly expect speed, but lenders must still manage repayment risk carefully.
Portfolio Discipline Matters
The decision to raise secured lending to 30% by FY27 also reflects a broader industry trend toward portfolio diversification. As funding costs, borrower stress and competitive pricing continue to shape the lending environment, institutions are looking for ways to protect margins without sacrificing growth.
For Credit Saison India, the move could help smooth earnings and reduce volatility across cycles. Secured assets generally offer more predictable recovery pathways than unsecured loans, though they can also involve longer processing times and higher operational complexity. The challenge will be to scale this book without diluting the company's ability to serve smaller businesses quickly and efficiently.
The company's expansion plan will likely be watched closely by investors and industry peers because it sits at the intersection of three major themes in Indian finance: MSME formalisation, geographic deepening beyond metros, and a renewed emphasis on credit quality. If executed well, the strategy could strengthen Credit Saison India's position as a meaningful lender to India's next wave of small-business growth.
At a broader level, the move highlights how lenders are adapting to a more selective credit environment. Growth is still available in India's MSME market, but the winners are likely to be those that can combine reach, underwriting discipline and a diversified loan mix. Credit Saison India's pivot toward secured lending suggests it intends to compete on exactly those terms.