Chapter 2 Section 2.1Industry Overview

The financial year 2024–25 proved to be a challenging period for the Indian microfinance industry, characterized by decelerating growth, narrowing profit margins, and intensified regulatory oversight. Despite remaining a vital contributor to financial inclusion, the industry witnessed a significant slowdown, accompanied by rising nonperforming assets (NPAs), multiple lending, increased borrower indebtedness, and operational difficulties triggered by regulatory

Read More

2.1 Industry Overview

The financial year 2024–25 proved to be a challenging period for the Indian microfinance industry, characterized by decelerating growth, narrowing profit margins, and intensified regulatory oversight. Despite remaining a vital contributor to financial inclusion, the industry witnessed a significant slowdown, accompanied by rising non-performing assets (NPAs), multiple lending, increased borrower indebtedness, and operational difficulties triggered by regulatory actions in certain states, like Karnataka.

Moving forward, the industry must emphasize stronger credit underwriting, disciplined lending practices, enhanced client protection, and effective grievance redressal mechanisms to facilitate a robust recovery and growth in FY 2025-26.

This chapter analyzes the overall status of the microfinance industry using data obtained from CRIF Highmark, a leading credit information company. The analysis encompasses information from all microlenders operating nationwide, including Banks, Small Finance Banks (SFBs), NBFCMFIs, NBFCs, and Others1 .

Microfinance Industry Snapshot as of 31st March 2025

Parameter Micro-Lender As of 31st March 2025 Micro-Lender Share (in %) Y-o-Y Growth (in %)
Loan Outstanding (in ₹ Cr.) NBFC-MFIs 1,48,419 39% -18%
Banks 1,24,431 32% -10%
SFBs 59,817 16% -20%
NBFCs 45,042 12% 0.2%
Others 3,516 1% 34%
Industry 3,81,225 -14%
Number of Loan Accounts (in lakhs) NBFC-MFIs 539 39% -19%
Banks 466 33% -11%
SFBs 216 15% -12%
NBFCs 163 12% -4%
Others 15 1% 34%
Industry 1,399 -13%
Amount Disbursed during the FY 2024-25 (in ₹ Cr.) NBFC-MFIs 1,07,184 38% -25%
Banks 1,08,159 38% -27%
SFBs 36,936 13% -36%
NBFCs 31,567 11% -13%
Others 284 0.1% -71%
Industry 2,84,130 -26%

1 Others refer to Cooperative Banks, Local Area Banks, Sec. 8 Companies, Nidhi Companies, etc.

Source: CRIF Highmark