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What is the story about?
India’s microfinance sector showed early signs of recovery in the March 2026 quarter, with portfolio outstanding rising to ₹3.31 lakh crore after nearly eight quarters of slowdown, according to CRIF High Mark’s latest MicroLend report.
The report said the industry’s portfolio outstanding grew 3.2% quarter-on-quarter in March 2026, supported by stronger loan originations and higher ticket sizes. The rebound also coincided with improving repayment behaviour across delinquency buckets.
Portfolio at Risk (PAR) 31–180 improved to 2% in March 2026 from 2.4% in March 2024, while PAR 91–180 declined sharply to 1.2% from 3.4% a year earlier, marking the lowest level in five quarters. Early-stage delinquency buckets, including PAR 1–30 and PAR 31–90, also fell below 1%.
Disbursement momentum strengthened during the quarter, with the value of microfinance loans disbursed rising 25.8% sequentially to ₹77,555 crore in Q4FY26. Loan volumes increased 22.8% quarter-on-quarter to 12.61 crore accounts.
Despite the recovery in lending activity, borrower and loan counts continued to contract, although at a slower pace than previous quarters. Active borrowers declined 3.2% quarter-on-quarter to 6.9 crore, while active loans fell 4.5% to 10.7 crore in March 2026.
The report noted that the recovery remained broad-based geographically, with all top 10 states except Tamil Nadu reporting quarter-on-quarter portfolio growth. Delinquency trends also improved across states, though some regions continued to remain above the national average.
Among lender categories, NBFC-MFIs emerged as the main growth driver, increasing their share in portfolio outstanding to 43.7% in March 2026 from 38.9% a year earlier. In contrast, banks’ share declined to 26.4% from 32.6% during the same period. NBFCs maintained a share of around 12–13%, while small finance banks accounted for nearly 16%.
The report also highlighted a shift towards lower-risk borrower profiles. Around 95% of portfolio exposure was concentrated among borrowers associated with three or fewer lenders, reflecting tighter underwriting standards and industry guardrails.
CRIF High Mark said the sector continues to recalibrate, but improving asset quality, stronger origination trends and rising ticket sizes indicate a gradual stabilization in India’s microfinance industry.
The report said the industry’s portfolio outstanding grew 3.2% quarter-on-quarter in March 2026, supported by stronger loan originations and higher ticket sizes. The rebound also coincided with improving repayment behaviour across delinquency buckets.
Portfolio at Risk (PAR) 31–180 improved to 2% in March 2026 from 2.4% in March 2024, while PAR 91–180 declined sharply to 1.2% from 3.4% a year earlier, marking the lowest level in five quarters. Early-stage delinquency buckets, including PAR 1–30 and PAR 31–90, also fell below 1%.
Disbursement momentum strengthened during the quarter, with the value of microfinance loans disbursed rising 25.8% sequentially to ₹77,555 crore in Q4FY26. Loan volumes increased 22.8% quarter-on-quarter to 12.61 crore accounts.
Despite the recovery in lending activity, borrower and loan counts continued to contract, although at a slower pace than previous quarters. Active borrowers declined 3.2% quarter-on-quarter to 6.9 crore, while active loans fell 4.5% to 10.7 crore in March 2026.
The report noted that the recovery remained broad-based geographically, with all top 10 states except Tamil Nadu reporting quarter-on-quarter portfolio growth. Delinquency trends also improved across states, though some regions continued to remain above the national average.
Among lender categories, NBFC-MFIs emerged as the main growth driver, increasing their share in portfolio outstanding to 43.7% in March 2026 from 38.9% a year earlier. In contrast, banks’ share declined to 26.4% from 32.6% during the same period. NBFCs maintained a share of around 12–13%, while small finance banks accounted for nearly 16%.
The report also highlighted a shift towards lower-risk borrower profiles. Around 95% of portfolio exposure was concentrated among borrowers associated with three or fewer lenders, reflecting tighter underwriting standards and industry guardrails.
CRIF High Mark said the sector continues to recalibrate, but improving asset quality, stronger origination trends and rising ticket sizes indicate a gradual stabilization in India’s microfinance industry.
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