Microfinance Sector Rebounds with Rs. 78,938 Crore Disbursements; Delinquency Drops to 2.35%, shows latest SIDBI-Equifax Microfinance Report

June 17, 2026

  • Microfinance industry records 3% QoQ growth in portfolio outstanding after prolonged contraction 

  • Industry-wide 30+ delinquency declines sharply from 6.64% to 2.35% YoY 

  • NBFC-MFIs emerge as dominant growth drivers, accounting for nearly half of industry originations 

  • Share of high-ticket loans above Rs. 75,000 rises significantly, reflecting improving borrower quality 

  • Five-year industry analysis and new borrower trend insights indicate improving underwriting quality and disciplined portfolio growth

 

Mumbai, 17 June 2026: India’s microfinance industry is witnessing early signs of recovery and improved credit discipline after multiple quarters of contraction, according to the 27th edition of the Microfinance Pulse Report jointly released by SIDBI and Equifax. 

The report captures key trends shaping the sector as of March 31, 2026, including revival in disbursements, improving delinquency levels, lender-wise market shifts, and evolving borrower behaviour. 

The report noted that while the microfinance industry recorded a 17% year-on-year contraction in portfolio outstanding between March 2025 and March 2026, the latest quarter marked a reversal in trend. The sector had witnessed four consecutive quarters of portfolio contraction prior to the latest recovery cycle. Portfolio outstanding grew by 3% quarter-on-quarter between December 2025 and March 2026, indicating renewed lending momentum and improved lender confidence across the sector. 

The industry’s overall portfolio outstanding stood at Rs. 2,77,053 crore as of March 2026, covering nearly 5.5 crore unique live borrowers across 7.60 crore active loans. 

Commenting on the findings of the report, Subhankar Mishra, Interim Managing Director, Equifax Credit Information Services, said: “Over the last few quarters, the microfinance sector has gone through a phase of correction and cautious lending. What we are now seeing in the data points to an early but clear sign of recovery. Improvement in portfolio quality, controlled borrower leverage, and revival in disbursement numbers indicate that the sector is moving towards a more stable growth cycle.” 

The report also includes a five-year comparative analysis of the microfinance industry, highlighting the sector’s transition through phases of rapid expansion, stress, contraction and portfolio consolidation. The analysis showed that while industry disbursements peaked at Rs. 3.79 lakh crore in FY24, lenders have increasingly shifted focus towards portfolio quality, disciplined growth and stronger risk management practices.

Average ticket sizes have also steadily increased from Rs. 38,167 in FY22 to Rs. 59,512 in FY26, even as industry delinquency improved significantly from 6.64% in March 2025 to 2.35% in March 2026.

Disbursements Rebound to Peak Levels 

Disbursement activity during the January-March 2026 quarter rebounded strongly to Rs. 78,938 crore, marking one of the strongest recovery phases for the sector after a prolonged slowdown. NBFC-MFIs continued to dominate industry originations, accounting for nearly half of the sector’s disbursement volume and value during the quarter. According to the report, NBFC-MFIs have emerged as the leading institutional category across active loans, portfolio outstanding, and fresh loan originations. The report also highlighted that NBFC-MFIs are increasingly filling the gap left by reduced participation from traditional banks. 

Asset Quality Improves Significantly 

One of the strongest indicators of sector stabilization has been the sharp improvement in asset quality. Industry-wide 30+ days past due (DPD) delinquency reduced substantially from 6.64% in March 2025 to 2.35% in March 2026. The report highlighted that delinquency levels improved across lender categories and geographies, with NBFCs continuing to report the lowest delinquency rates among all lender segments. 

The report’s vintage analysis showed that loans originated in JFM’25 and JAS’25 are performing materially better than earlier JAS’24 cohorts, with lower delinquency build-up across Months-on-Book (MOB), indicating improving underwriting standards and stronger borrower selection across the industry. 

Industry Witnessing Shift Toward Higher Ticket Loans 

The report also highlighted a structural shift in lending behaviour across the industry, with lenders increasingly moving toward higher-value loans and more credit-tested borrowers. The share of loans above Rs. 75,000 rose sharply from 26% in JFM’25 to 41% in JFM’26, while smaller ticket loans below Rs. 50,000 continued to shrink. 

Average ticket size across the industry increased to Rs. 62,945, reflecting lenders’ growing focus on borrowers with stronger repayment capacity and established credit histories. 

The report also showed a continued shift towards Existing-to-Credit (ETC) borrowers, whose share increased from 67% in 2023 to nearly 80% in 2026, while the share of New-to-Credit (NTC) borrowers declined from 33% to 20% during the same period. This trend likely reflects lenders’ increasing focus on borrowers with established credit histories and stronger repayment behaviour. 

Top States See Improved Risk Profile 

All top 10 microfinance states witnessed moderation in portfolio outstanding alongside improvement in delinquency levels. Bihar remained the largest microfinance market with a 16% share of total industry portfolio outstanding, while Tamil Nadu reported the lowest 30+ delinquency rate among major states at 1.88%. The report also observed meaningful improvement in historically high-risk markets, indicating broader stabilization across regional portfolios. 

Borrower leverage trends across the sector also continued to improve. The proportion of borrowers associated with four or more lenders declined further between September 2025 and March 2026 across all top five states. West Bengal reported the lowest borrower leverage levels, with less than 1% borrowers associated with four or more active lenders, indicating moderation in multi-lender exposure and improving credit discipline across the ecosystem. 

Aspirational Districts Continue to Drive Financial Inclusion 

India’s aspirational districts accounted for 15% of the overall microfinance portfolio outstanding, with total outstanding portfolio reaching Rs. 42,441 crore. Asset quality in these districts improved considerably over the past year, with 30+ delinquency declining from 8.53% in March 2025 to 2.26% in March 2026. The findings indicate continued progress in extending formal credit access while maintaining portfolio quality across financially underserved regions. 

The report also highlighted stable borrower leverage trends across the sector. Nearly 74% of borrowers currently have exposure to only one lender, while less than 1% borrowers are associated with four or more lenders. This reflects improved lending discipline and controlled systemic risk within the microfinance ecosystem. 

About Equifax 

Equifax Credit Information Services Pvt. Ltd. (Equifax India) is one of India’s leading credit information and analytics companies and part of global data, analytics and technology leader Equifax Inc. Since launching its Consumer Bureau in 2010, Equifax India has built one of the country’s most inclusive credit data ecosystems, with over 2.1 billion reported tradelines and insights across retail, microfinance, commercial and employment segments. 

Serving 7,000+ banks and NBFCs, Equifax India leverages advanced analytics, AI-driven solutions and cloud-enabled infrastructure to deliver high standards of data freshness and accuracy. The company plays a critical role in enabling responsible lending, strengthening risk management and expanding access to formal credit across India’s growing credit economy.

 

For any further details, please contact:

Suhas Diwakar Zele (Head of Marketing & Communications, Equifax India)
suhasdiwakar.zele@equifax.com & marcom.india@equifax.com 

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