As indebtedness rises, microfinance industry has amber lights switched on

MFIs are now the largest providers of micro-credit with loans outstanding of Rs 1,42,245 cr at end-May 2023

“I don’t want to sound alarmist, but it pays to be cautious,” says Manoj Kumar Nambiar, managing director (MD) of Arohan Financial Services, a micro-finance institution (MFI).

MFIs are now the largest providers of micro-credit with loans outstanding of Rs 1,42,245 crore at end-May 2023; their share being 40.6 per cent of industry portfolio of Rs 3,50,322 crore (this data is based on loans originated after February 2017; June 2023 data is not yet available). While banks were dominant during Covid-19, MFIs have since taken the lead.

The value of the Financial Inclusion Index (FI Index) for March