Business · Economy · 1 hr ago
Indian lenders curb rural loans as weak monsoon raises repayment risks
India’s leading non-bank lenders are pulling back fresh loans in rural areas hit by drought.
The lenders include Shriram Finance, Mahindra & Mahindra Financial Services and Bajaj Finance.
India’s 2026 southwest monsoon rainfall was 13% below normal, with an even larger shortfall in the southern peninsula and Karnataka.
Weaker harvests can reduce rural incomes and spending, making it harder for some borrowers to repay loans on time.
Lenders are responding by cutting lending in stressed areas, monitoring borrowers more closely and strengthening collections.
Shriram Finance has lowered its loan-growth forecast to 15–17%, while M&M Finance says it has reduced funding in some locations and is monitoring drought-prone districts.
The companies will keep adjusting lending and collections as they track local conditions and signs of repayment stress.
India’s leading non-bank lenders are curbing fresh loans in drought-hit areas as weak monsoon rainfall raises concerns about borrowers’ ability to repay.
Rainfall during the 2026 southwest monsoon was 13% below normal, the weakest since 2015.
Shriram Finance is moderating lending in parts of Karnataka, central India and eastern Maharashtra.
M&M Finance has reduced funding in stressed locations, while Bajaj Finance is cutting business in areas where drought has been declared.
The lenders are also strengthening collections and monitoring borrowers for signs of repayment stress.
- Who
- Shriram Finance, M&M Finance and Bajaj Finance, among India’s leading non-bank lenders.
- What
- They are curbing or reducing lending in drought-hit and stressed areas and stepping up monitoring and collections.
- When
- In 2026, with M&M Finance reporting reductions during the second quarter.
- Where
- Drought-hit regions of India, including parts of Karnataka, central India and eastern Maharashtra.
- Why
- Weak monsoon rainfall and lower farm output may reduce rural incomes and make it harder for some borrowers to repay on time.
This story does not have two clearly opposing sides.
India’s southwest monsoon rainfall was 13% below normal, with a 24% deficit in the southern peninsula and a 32% shortfall in Karnataka.
M&M Finance reduced funding in some stressed locations and strengthened collection operations.
Bajaj Finance monitored monsoon developments and took action where portfolio indicators showed pressure.
Economic Times reported that lenders were curbing fresh lending in drought-hit regions.
- Southwest monsoon
- 13% below normal in 2026
- Southern peninsula
- 24% rainfall deficit
- Karnataka
- 32% rainfall shortfall
- Shriram Finance loan-growth guidance
- Reduced to 15–17% from 18%
- M&M Finance monitoring
- Three states and 282 drought-prone districts
- Bajaj Finance coverage
- Tracking conditions across all 720 districts
What people are saying
We are being watchful and are not increasing the lending book in such locations
If the situation requires further action, we could revise loan-to-value norms or focus more closely on collections
Proactively, again in Q2, we have reduced some of the funding in some of these locations which are stressed
You would be a little more conservative, keeping in mind the stress in those locations