New Delhi, June 22 -- India's micro, small and medium enterprises (MSME) loan segment is showing initial signs of stress, with delinquency levels edging higher in April 2026, according to a sector update by 360 ONE Capital.

Lenders remain cautious amid concerns over supply-chain disruptions and rising input costs linked to the ongoing West Asia conflict.

The report noted that while the geopolitical situation has not yet materially impacted banks' asset quality, financial institutions are wary of potential second-order effects on MSME borrowers.

The report said, "The recent commentaries by the banks (during 4Q) and our channel checks indicate that though the impact of the West Asia crisis is not yet visible on the asset quality, the ban...