India's microfinance sector is increasingly doing more with less. While the number of active loans has fallen 22.4% year-on-year

 

India's microfinance sector is increasingly doing more with less. While the number of active loans has fallen 22.4% year-on-year, the average exposure per loan has risen 22.7%, indicating a clear move towards larger ticket sizes and more mature borrower profiles. At the same time, portfolio quality has remained steady, underscoring a shift from rapid expansion to calibrated growth. The microfinance sector today resembles a retailer focusing on fewer but higher-value customers. Active loans have reduced, but average loan exposure has climbed sharply, allowing the industry to preserve portfolio strength while maintaining stable repayment performance.

 

Captured below are the key observations from the report:

India's microfinance Gross Loan Portfolio (GLP) stood at ₹328.4 thousand crore as of September 2026, registering a decline of 5.0% YoY and 1.4% QoQ. The portfolio comprised 9.6 crore active loans, serving a live customer base of 6.4 crore borrowers.

Average exposure per loan increased to ₹34.2 thousand, registering growth of 5.8% QoQ and 22.7% YoY, indicating a shift towards higher loan exposure.

Portfolio quality remained steady, with PAR 1–30, PAR 31–90 and PAR 91–180 each remaining below 1%. PAR 31–180 stood at 1.6%.

NBFC-MFIs strengthened their position as the largest lender segment, with a portfolio outstanding of ₹146.7 thousand crore and a market share of 44.7% in September 2026. Their portfolio grew 9.4% YoY and 0.2% QoQ.

Microfinance disbursement value stood at ₹56,956 crore in Q2 FY27, registering 5.1% YoY growth despite a 7.5% QoQ decline. The average MFI ticket size increased to ₹63.1 thousand, up 17.5% YoY.

First-time borrowers (NTC borrowers) accounted for 19.7% of sanctioned loans during Q2 FY27.

Larger-ticket loans continued to gain traction, with the ₹50,000–₹80,000 segment accounting for 41.3% of origination value in Q2 FY27. The share of loans above ₹1 lakh increased to 15.1% from 11.2% a year earlier, with disbursement value in this segment growing 41.3% YoY.

Borrower consolidation remained a key trend, with borrowers associated with two or fewer active lenders constituting 81.2% of the portfolio.

Among regional markets, Bihar remained the largest microfinance market among the top 10 states, with a GLP of ₹51.1 thousand crore. Tamil Nadu recorded a 3.7% QoQ increase in GLP to ₹40.3 thousand crore.

Portfolio quality improved significantly YoY across key states, with Karnataka's PAR 31–180 declining from 7.4% to 1.2%, while Bihar recorded an improvement from 4.8% to 1.2%.

Please find attached and appended the press release along with the report for your easy reference. We would also be happy to arrange a conversation with the spokesperson to discuss the findings.

 

NBFC-MFIs Lead India’s Microfinance Market as Portfolio Share Reaches 44.7%: CRIF MicroLend

Mumbai, 5th November: CRIF Credit Information Services Private Limited, has released the September 2026 edition of MicroLend, its quarterly publication on microfinance lending in India. The latest edition captures key industry trends as of September 2026, including portfolio performance, disbursement activity, asset quality, borrower leverage, lender dynamics and regional trends.

India’s microfinance sector continued to demonstrate resilience, with the Gross Loan Portfolio (GLP) at ₹328.4 thousand crore as of September 2026. While the overall portfolio moderated during the period, disbursement value grew 5.1% year-on-year to ₹56,956 crore in Q2 FY27, accompanied by an increase in average ticket sizes.

The report further highlights a continued shift towards larger-ticket loans, increased concentration among borrowers associated with fewer active lenders, and the growing prominence of NBFC-MFIs, which accounted for 44.7% of the industry portfolio. These trends collectively point towards an evolving microfinance landscape marked by borrower consolidation, changing lending patterns and continued focus on portfolio quality.

Key Highlights:

Portfolio Moderates Amid Industry Consolidation and slower disbursements: India's microfinance Gross Loan Portfolio (GLP) stood at ₹328.4 thousand crore in September 2026, down 5.0% year-on-year and 1.4% quarter-on-quarter. The portfolio comprised 9.6 crore active loans serving a live customer base of 6.4 crore borrowers. Average exposure per loan increased to ₹34.2 thousand, up 5.8% quarter-on-quarter and 22.7% year-on-year.

Portfolio Quality Remains Steady: Overall microfinance loan delinquency remained stable in September 2026, with PAR 1-30, PAR 31-90 and PAR 91-180 each remaining below 1%, while PAR 31-90 and PAR 91-180 remained unchanged at 0.8%. PAR 31-180 remained at 1.6%, a marked improvement from 4.6% in September 2025.

NBFC-MFIs Strengthen Their Lead: NBFC-MFIs remained the largest lender segment, with portfolio outstanding of ₹146.7 thousand crore and a market share of 44.7% in September 2026. Their portfolio grew 9.4% year-on-year and 0.2% quarter-on-quarter. NBFCs also recorded growth, while banks continued to see a decline, partly due to the reclassification of microfinance exposures into retail loans.

Disbursement Value Improves Year-on-Year as Ticket Sizes Rise: Microfinance disbursements stood at ₹56,956 crore in Q2 FY27, down 7.5% quarter-on-quarter but up 5.1% year-on-year. The average MFI ticket size increased to ₹63.1 thousand, up 1.6% quarter-on-quarter and 17.5% year-on-year. First time borrowers (NTC borrowers) accounted for 19.7% of sanctioned loans and 16.5% of sanctioned amount in this quarter.

Larger-Ticket Loans Gain Share: Loans in the ₹50,000-₹80,000 segment accounted for 41.3% of origination value in Q2 FY27. The share of ₹80,000-₹1 lakh loans rose to 18.5% from 14.7% a year earlier, while the share of loans with originations value above ₹1 lakh increased to 15.1% from 11.2%. Disbursement value in the above-₹1 lakh segment grew 41.3% year-on-year.

Borrower Consolidation Supports Portfolio Performance: Borrowers associated with two or fewer active lenders constituted 81.2% of the portfolio in September 2026, and demonstrated improved performance with PAR 31-180 of 1.9% compared to 4.1% for 3 lender association and 6.6% for >3 lender association

 

Regional Trends

Tamil Nadu stood out with a 3.7% QoQ increase in GLP to ₹40.3 thousand crore, while PAR 31–180 improved from 1.5% in June 2026 to 1.4% in September 2026.

Bihar remained the largest microfinance market among the top 10 states, with GLP of ₹51.1 thousand crore, while PAR 31–180 improved to 1.2% in September’ 26 from 1.3% in June 2026.

Portfolio quality improved significantly YoY across several key states, including Karnataka, where PAR 31–180 declined from 7.4% to 1.2%, and Bihar, where it improved from 4.8% to 1.2%.

The top 10 states accounted for 82.3% of the overall microfinance GLP, highlighting continued geographic concentration across the country's largest microfinance markets.

 

The September 2026 edition of MicroLend indicates that India's microfinance sector continues to consolidate around stronger borrower profiles and larger loan sizes. While portfolio outstanding moderated, year-on-year disbursement value improved and delinquency remained contained. Regulatory guardrails and greater borrower concentration among a smaller number of lenders continue to support stable portfolio performance.