Microfinance

The difficult phase for the microfinance business is now behind us, with risks playing out favourably, and growth in the segment is expected to return from the second quarter onwards, IndusInd Bank MD and CEO Rajiv Anand has said. IndusInd Bank faced a severe governance and accounting crisis in 2025 centred around its microfinance subsidiary, Bharat Financial Inclusion Ltd (BFIL). The bank reversed Rs 674 crore of cumulative interest income recognised incorrectly across FY25. A further Rs 172 crore was disclosed as fraud, where employees falsely reported the sum as fee income in the microfinance business. "We have had a fairly difficult time on our microfinance business. But it is all now behind us. Risk is playing out quite well at this point in time and Q2 onwards we should see growth come back in our microfinance businesses," Anand told PTI in an interview. The microfinance arm has a very successful business called Bharat Superstore, where it lends to kirana stores, small ...

Banks' microfinance portfolio fell 28.5 per cent year-on-year as loan reclassification weighed on reported numbers, while NBFC-MFIs expanded their portfolio

The lender expects its cost of funds to fall to 9.75-9.8 per cent after its AA- rating upgrade and plans to raise the non-JLG portfolio share to 40 per cent in two years

The government has eased norms under the microfinance credit guarantee scheme to boost fund flow to smaller lenders as utilisation of the ₹20,000-crore corpus remains low

The lender lowered its FY27 return on assets guidance after June-quarter earnings, overshadowing a 35 per cent rise in net profit and weighing on investor sentiment

The sector had been under stress for the last two years after rapid credit expansion left many borrowers over-leveraged, driving up defaults and prompting lenders to tighten underwriting standards

The initiative aims to improve governance and operations as smaller MFIs say access to bank funding remains constrained

Microfinance loans increased for the first time after seven consecutive quarters of decline, although the number of borrowers continued to contract during the January-March 2026 quarter, according to the RBI's latest Financial Stability Report (FSR) released on Tuesday. The RBI said the borrower base shrank by 22.7 lakh in the latest quarter, indicating that while lending activity has started picking up, the sector is still witnessing consolidation in its customer base. The central bank also pointed to a continued improvement in asset quality as the share of 31-180 days past due (DPD) declined for the fifth successive quarter. This reflects that the asset quality has improved after the guardrails were adopted by the sector. According to the report, the 31-180 DPD of banks stood at 2.5 per cent, which is the highest among all lenders involved in MFI lending. This was followed by 2.0 per cent each by overall and small finance banks, 1.9 per cent of NBFC-MFI, and 1.6 per cent of ...

CRIF High Mark data showed the microfinance industry's loan portfolio expanded in May as delinquencies eased further, while fresh loan disbursements remained broadly stable

Asset quality improved and earnings strengthened in Q4FY26, but rural stress, microfinance exposure, West Asia tensions and monsoon risks could weigh on NBFCs in FY27

India's microfinance sector is recovering as defaults fall, loan sizes rise, and government guarantees extend to boost cheaper credit to small borrowers

Crisil Ratings says lending guardrails have improved portfolio quality and credit discipline, leading to a sharp reduction in overdue build-up in microfinance securitised pools

India's microfinance sector is seeing early revival signs as lenders prioritise asset quality and portfolio consolidation over aggressive loan growth after two years of slowdown

The SIDBI-Equifax report said the sector's portfolio grew 3 per cent quarter-on-quarter in the March quarter, while 30-plus delinquency fell sharply

India's microfinance sector recorded its first sequential portfolio expansion in seven quarters, while asset quality improved and disbursements reached a seven-quarter high

While overall asset quality improved in April, a rise in early delinquencies and slower loan disbursals indicate lenders remain focused on portfolio discipline

The government has approved the extension of the Credit Guarantee Scheme for Microfinance Institutions - 2.0 and a hike in the maximum loan limit to Rs 1,000 crore. As of date, loans totalling Rs 770 crore have been sanctioned under the scheme, the Finance Ministry said in a statement. The CGSMFI-2.0 scheme was introduced on March 20, 2026, and aims to provide guarantee cover to Banks/ FIs through National Credit Guarantee Trustee Company Limited (NCGTC) against expected losses on the financial assistance extended by them to NBFC-MFIs and MFIs for on-lending to small borrowers. The scheme was valid till June 30, 2026 or loans up to Rs 20,000 crore are guaranteed, whichever is earlier. "The Government of India has approved extension in validity of the Credit Guarantee Scheme for Microfinance Institutions-2.0 (CGSMFI-2.0) up to August 31, 2026, or till guarantees for an amount of Rs 20,000 crore are issued, whichever is earlier," the ministry said. The government has also approved a

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India's microfinance model has reached its limits; sustainable growth now requires a shift towards meso-finance, stronger savings buffers, and less reliance on group lending.

Large microfinance institutions are diversifying into retail and MSME lending as regulatory changes and recent sector stress reshape growth strategies