New Delhi, May 16 -- Lending by MSMEs witnessed robust growth in recent years, with Non-Banking Financial Companies (NBFCs) emerging as the front-runners, outpacing the growth rates of both private and public sector banks, according to CareEdge Ratings.

Between 2020-21 and 2023-24, NBFCs recorded a 32 per cent compound annual growth rate (CAGR) in MSME lending, albeit on a smaller base, compared to 20.9 per cent for private banks and 10.4 per cent for public sector banks.

The share of MSME credit in NBFCs' overall loan portfolio rose from 5.9 per cent in 2020-21 to 9.1 per cent in the first half of 2024-25, an increase of over 50 per cent, as per a report from the rating agency.

Over the same period, the banks maintained relatively sta...