MFIs see funding fall over 50% in FY25 to Rs 58K crore, seek support line

The industry's fund crunch comes over lenders' fears of asset quality, repayment, and over-leverage, which ties in to the Reserve Bank of India's push for responsible lending

Microfinance institutions (MFIs) saw their funding crash by more than half in the financial year ended March 2025, declining to Rs 58,109 crore, which works out to a fall of 55.40 per cent year-on-year (Y-o-Y).

 

MFIs typically receive funding lines from banks, non-banking financial institutions, Small Industries Development Bank of India, and the National Bank for Agriculture and Rural Development; they also raise funds through bonds.

 

“Confidence levels of lenders to MFIs have gone down in recent times over fears on asset quality, and concerns of over-leverage and relatively poor collections," an industry official said.

 

MFIs are now seeking a