High Leverage Warning indicates that the borrower may be carrying too much debt compared with its capital base or cash-generation ability. In MSME underwriting, leverage is important because a highly leveraged business has less room to absorb sales decline, margin pressure, or delayed receivables. For example, if total outside liabilities are high while net worth and cash profits are low, even a small business disruption can affect repayment. The warning helps the credit team review DSCR, interest coverage, debt-equity ratio, unsecured loans, and promoter support. It does not automatically mean rejection, especially for growing businesses, but it requires stronger justification and monitoring. The common mistake is to look only at sanctioned limits and ignore supplier credit, informal borrowings, group loans, or off-balance-sheet obligations.