Archive · 28 Nov 2025
Microfinance Sector Faces Challenges Amid Improved Asset Quality
The microfinance sector in India is facing challenges.
The total amount of microfinance loans has decreased by 17% to ₹3.39 lakh crore as of September 2025.
This means that nearly 50 lakh borrowers have left the formal credit system.
Despite this, the quality of loans has improved, with fewer loans being at risk of default.
The sector is spread across 36 states and union territories, with the East and North-East regions having the largest share of the loan portfolio.
The RBI Deputy Governor has emphasized the importance of responsible microfinance to drive economic growth and financial inclusion.
However, the sector is in need of liquidity to ensure that the financial inclusion gains built over decades do not wither away.
Microfinance loan portfolio in India declined by 17% to ₹3.39 lakh crore as of September 30, 2025.
Nearly 50 lakh borrowers have exited the formal credit system due to the funding squeeze.
Portfolio at Risk (31-90 days) improved to 1.09%, and 98% of clients are within MFIN Guardrails.
The microfinance sector is present in 36 states/UTs and 718 districts, with the East and North-East regions accounting for 33% of the total portfolio.
RBI Deputy Governor Swaminathan J emphasized the role of responsible microfinance in driving economic progress and financial inclusion.
- Who
- Microfinance Industry Network (MFIN), RBI Deputy Governor Swaminathan J
- What
- Microfinance loan portfolio declines by 17%, 50 lakh borrowers exit formal credit
- When
- As of September 30, 2025
- Where
- India (36 states/UTs and 718 districts)
- Why
- Funding squeeze and regulatory scrutiny on industry practices
- Microfinance Loan Portfolio (Sep 2025)
- ₹3.39 lakh crore
- Microfinance Loan Portfolio (Sep 2024)
- ₹4.08 lakh crore
- Number of Borrowers (Sep 2025)
- 3.5 crore
- Number of Borrowers (Sep 2024)
- 4.37 crore
- Portfolio at Risk (31-90 days)
- 1.09%
- Clients within MFIN Guardrails
- 98%
- Regional Distribution of Portfolio (East & North-East)
- 33%
- Regional Distribution of Portfolio (South)
- 28%
- Regional Distribution of Portfolio (North)
- 15%
- Regional Distribution of Portfolio (West)
- 15%
- Regional Distribution of Portfolio (Central)
- 9%
Sources
Microfinance can drive ‘macro progress', says RBI Deputy Governor Swaminathan J
Microfinance Loan Portfolio Falls 17%, 50 Lakh Borrowers Out Of Formal Credit
Lenders’ MFI portfolio asset quality improves: MFIN
RBI Dy Gov Wants MFI Lenders to Price Loans Reasonably
