New Delhi, Dec. 19 -- Credit to micro, small and medium enterprises (MSMEs) has emerged as a key driver of bank loan expansion in recent years, supported by strong policy measures, government-backed credit guarantees and wider formalisation through the Udyam registration framework, highlighted a report by Axis Bank.

The report highlighted that in FY25, MSMEs accounted for 22 per cent of incremental non-food bank credit, taking their overall share in total non-food credit to 18 per cent, highlighting the growing importance of the segment in India's banking system.

The steady rise in MSME lending has been aided by a combination of lower interest rates, government credit-loss guarantees and increased use of technology-driven, data-based un...