Microfinance sector portfolio sees contraction, asset stress builds up

Aggregated portfolio outstanding stood at Rs 320.9 trillion in December 2025, down 7.2% Q-o-Q and 18% Y-o-Y, while 180-plus DPD stress rose sharply year-on-year

The microfinance industry is navigating a phase of cautious resilience, balancing portfolio consolidation with selective growth. As of December 2025, aggregated portfolio outstanding stood at Rs 320.9 trillion, contracting 7.2 per cent quarter-on-quarter (Q-o-Q) and 18 per cent year-on-year (Y-o-Y), alongside a pronounced drop in active loans of 9.1 per cent Q-o-Q and 23 per cent Y-o-Y.

 

On the portfolio quality side, the portfolio-at-risk (PAR) in the 1–30 days-past-due (DPD) bucket declined from 1.8 per cent to 1 per cent; PAR 31–90 fell from 3.1 per cent to 1.4 per cent; and PAR 91–180 eased from 3.2 per cent to 2 per cent between December 2024 and December 2025. However, PAR 180-plus DPD (including write-offs) rose from 7.1 per cent to 17.3 per cent over the same period.