Microfinance sector’s gross loan portfolio reaches ₹3.28 lakh crore but there’s a flipside

India’s microfinance sector had a Gross Loan Portfolio (GLP) of ₹3.28 lakh crore as of September 2026, even as the overall portfolio moderated amid industry consolidation and slower disbursements, according to CRIF Credit Information Services’ September edition of its quarterly MicroLend report.

The portfolio declined 5% year-on-year and 1.4% quarter-on-quarter, comprising 9.6 crore active loans and a live customer base of 6.4 crore borrowers. However, average exposure per loan rose 22.7% year-on-year and 5.8% sequentially to ₹34,200.

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Disbursement value increased 5.1% year-on-year to ₹56,956 crore in the second quarter of FY27, although it fell 7.5% from the previous quarter. The average microfinance ticket size rose 17.5% year-on-year to ₹63,100.

The report highlighted a continued shift towards larger loans. The ₹50,000-80,000 segment accounted for 41.3% of origination value in Q2 FY27. The share of loans between ₹80,000 and ₹1 lakh increased to 18.5%, from 14.7% a year earlier, while loans above ₹1 lakh accounted for 15.1%, compared with 11.2%. Disbursement value in the above-₹1 lakh category grew 41.3% year-on-year.

Non-banking financial company-microfinance institutions (NBFC-MFIs) remained the largest lender segment, accounting for 44.7% of the industry portfolio, or ₹1.46 lakh crore. Their portfolio grew 9.4% year-on-year. Banks, meanwhile, continued to see a decline, partly due to the reclassification of microfinance exposures as retail loans.

Asset quality remained stable, with delinquency across the reported portfolio-at-risk categories below 1%. PAR 31-180 stood at 1.6% in September 2026, down sharply from 4.6% a year earlier.

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Borrower consolidation also supported portfolio performance. Those associated with two or fewer active lenders accounted for 81.2% of the portfolio and had a PAR 31-180 of 1.9%, against 4.1% for borrowers linked to three lenders and 6.6% for those associated with more than three.

Bihar remained the largest microfinance market among the top 10 states, with a GLP of ₹51,100 crore. The top 10 states together accounted for 82.3% of the industry's portfolio.