Microfinance Industry

Muthoot Microfin reported a healthy provisional business update for Q1FY27, with AUM rising 18% YoY to ₹14,457 crore, supported by continued portfolio expansion and strong disbursement momentum.

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

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

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 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

Disbursements under the scheme are yet to begin, as microlenders had flagged that the ₹300 crore cap for large institutions was inadequate

Microfinance lender expects stronger growth and better collection efficiencies as it expands branches and diversifies operations

The microfinance sector's gross loan portfolio rose sequentially in Q4FY26, supported by higher loan originations, bigger ticket sizes and improving asset quality

This trend suggests that lenders are prioritising credit discipline over growth, particularly in a macro environment marked by cautious lending

Sa-Dhan launches Sankalp 3.0 guardrails to improve governance, risk management and customer protection in microfinance sector amid improving asset quality

Centre's credit-guarantee scheme offers temporary relief to microfinance institutions, but sustainable recovery will depend on improved lending practices, risk management, and sector discipline

Banks are likely to remain cautious in lending to MFIs despite the credit guarantee scheme, with underwriting standards and risk assessment frameworks unchanged

The microfinance lender is targeting an AUM of Rs 9,000 crore in FY27

Microfinance lenders are expanding into secured products such as gold, mortgage and MSME loans as RBI's revised norms and asset quality pressures push them to diversify portfolios

Microfinance lender CreditAccess Grameen plans to increase overseas borrowings to $400 million annually over the next two to three years to diversify funding and support asset growth

Experts are calling for a reimagination of microfinance as credit costs rise with higher risk provisions and writeoffs

Microfinance loan portfolio fell to Rs 3.14 trillion in Q3 FY26, down 7.3% sequentially, with 50 lakh borrowers losing access to formal finance even as portfolio quality showed improvement