Microfinance in India: Robust Growth Continues

The Indian microfinance sector has experienced remarkable growth over the past five years, with the outstanding portfolio reaching Rs 4,33,697 crore in FY24, marking a 24.5% year-on-year increase. This growth trajectory is expected to continue, with projections indicating a 20-23% expansion in FY26. The sector has diversified its product offerings, including vehicle loans, business loans, and housing finance, reducing the share of unsecured loans. Despite some signs of stress in certain segments, the industry remains resilient, with NBFC-MFIs holding the largest market share at 39.4%. The government's focus on supporting small and mid-sized MFIs through potential equity funds in the upcoming budget further underscores the sector's importance in financial inclusion.
Source: MFIN data, ICRA report, Business Standard