Archive · 2 Jun 2025
Indian Microfinance Shows Recovery, MSME Credit Grows
The microfinance and MSME sectors in India are showing mixed signals.
Microfinance is recovering, with higher loan amounts but lower overall lending volume, while MSME credit is growing.
The microfinance sector saw a 12% increase in disbursements in the last quarter but a drop year-over-year.
MSME credit grew by 13% and the delinquency rate dropped.
Lenders are focusing on quality, and the trend is toward larger loan amounts.
Different states are seeing varied impacts, with some contractions and some growth in lending.
Overall, both sectors are navigating economic conditions and regulatory adjustments.
Microfinance disbursements rose 12% sequentially in the March 2025 quarter.
MSME commercial credit portfolio grew 13% year-on-year to ₹35.2 lakh crore.
Gross loan portfolio (GLP) for microfinance stood at ₹3.81 lakh crore.
Delinquency rates for MSMEs dropped to a five-year low of 1.8%.
Lending is shifting toward higher-ticket loans and professionals/service sectors.
- Who
- Microfinance and MSME sectors in India
- What
- Microfinance shows signs of recovery with an uptick in disbursements and MSME credit grew 13% year-over-year
- When
- March 2025 Quarter
- Where
- India
- Why
- Lenders are focused on quality lending, regulatory conditions, and adapting to economic conditions.
MSME challenges
Microfinance & MSME Trends
Borrower Size
MSME challenges
Larger borrowers tend to have better credit discipline.
Microfinance & MSME Trends
Smaller MSMEs may experience stress and face higher delinquencies.
- Microfinance Q4 2025 Disbursement Increase
- 12%
- Microfinance GLP (March 2025)
- ₹3.81 lakh crore
- MSME Credit Growth (YoY)
- 13% to ₹35.2 lakh crore
- MSME Delinquency Rate
- Dropped to 1.8%
- Loan Category Growth
- Loans above ₹1 lakh grew 38.5% year-on-year
