Chapter 3 - Section 3.3Client Outreach of MLIs
Microfinance addresses the financial needs of low-income individuals who often face difficulties accessing funds from mainstream banks. MLIs provide credit to the poor people (whose annual household income is less than `3 lakhs) in a convenient, hassle-free manner, at their doorstep.
Outreach of MLIs to Borrowers (in lakhs): Yearly Trend and Category–wise Breakup as of March 2025
Outreach to Borrowers (in lakhs): Category–wise Breakup as on March’25
Outreach to Borrowers (in lakhs): Size–wise Breakup as on March’25
3.3 Client Outreach of MLIs
Microfinance addresses the financial needs of low-income individuals who often face difficulties accessing funds from mainstream banks. MLIs provide credit to the poor people (whose annual household income is less than ₹3 lakhs) in a convenient, hassle-free manner, at their doorstep.
The active client base of the MLIs in FY 2024- 25 had decreased to 627 lakhs from the last year’s position of 698 lakhs, posting a Y-o-Y de- growth of (-10%). However, if the client base of NBFCs and BC Companies are excluded and only the client base of the pure MFIs category (NBFC-MFIs, Societies, Sec.8 Coms, Trust, MACS or Cooperatives), are considered, then the active client base is 487 lakhs, with a Y-o-Y de-growth of (-14%).
As depicted in Figure 3.5 below, the active borrower base has nonetheless shown remarkable long-term expansion, nearly doubling over the past decade—from 371 lakhs in March 2015 to 627 lakhs in March 2025.
The majority of microfinance clients are served by NBFC-MFIs, which account for 71% of the total. The NBFCs cater to another 16%, while Societies, Trusts, MACS or Cooperatives, and BC companies each serve 7%. Section 8 Companies represent only a marginal share of 0.4%. In terms of scale, MLIs with loan outstanding exceeding ₹2,000 Cr. collectively account for nearly 81% of the reported 203 MLIs’ client base.
Figure 3.5: Outreach of MLIs to Borrowers (in lakhs): Yearly Trend and Category–wise Breakup as of March 2025
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A further segregation of the total client outreach based on the legal forms of MLIs and the size of MLIs is given below:
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Note: In the decadal trend graph of active borrowers given above, the number of active borrowers in each year (from 2015-2025) represented by blue bars, includes active borrowers of all the Micro Lending Institutions (MLIs), however for FY 2024-25, the break-up of total number of active borrowers (i.e. 627 lakhs) is segregated as pure MFIs (NBFC-MFIs, Societies, Sec.8 Coms, Trust, MACS or Cooperatives), (represented by red bar), NBFCs (represented by green bar), and Pvt. & Pub. Ltd. Coms (represented by orange bar) to get a better understanding of the growth of the pure MFIs.
3.3.1 New Borrowers 4
The business expansion of MLIs is primarily driven by the addition of new borrowers. As per reported data, 158 MLIs added nearly 129 lakhs new borrowers during FY 2024-25, compared to 188 lakhs new borrowers added by 168 MLIs in the previous year. NBFC-MFIs led this growth with 103 lakhs accounting for 80% of the total, while Very Large MFIs (with GLP exceeding ₹2,000 Cr.) contributed 95 lakhs, representing 74% of the new borrowers. At the end of FY 2024-25, the total number of active borrowers with MLIs stood at 627 lakhs, down from 698 lakhs in the previous financial year.
Figure 3.6: No. of MLIs New Borrowers (in lakhs) added and Category–wise Breakup as of March 2025
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3.3.2 Regional Outreach of MLIs
The regional distribution of microfinance clients remains uneven across the country. In FY 2024-25, out of the total active client base of 627 lakhs, the Southern region accounted for the highest share at 30%, followed by the Eastern region at 28%, the Central region at 22%, the Western region at 10%, and the Northern region at 8%. The North Eastern region had the lowest share, contributing just 2% of the active client base.
During FY 2024-25, the Southern region’s share grew from 29% to 30%, the Western region from 9% to 10%, and the North Eastern region from 1% to 2%. In contrast, the Eastern region declined from 30% to 28%, while the Northern region fell from 9% to 8%. The Central region’s share held steady at 22%.
Figure 3.7: Regional breakup of MLIs Active Client base as of March 2025
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3.3.3 State-wise MLIs Client Outreach
Table 3.3 presents the State/UT-wise MLIs’ client base, indicating that nearly all States/ UTs witnessed a negative growth during the year, with the exception of a few regions that traditionally hold a smaller share of the microfinance portfolio. These include the Andaman & Nicobar Islands, Mizoram, Sikkim, Assam, Telangana, and Andhra Pradesh. Among the larger portfolio states, sharper declines were recorded in Rajasthan (-23%), Odisha (-20%), Jharkhand (-18%), Kerala (-17%), Tamil Nadu (-15%), West Bengal (-14%), Bihar (-12%), Madhya Pradesh (-11%), and Uttar Pradesh (-9%). In contrast, Andhra Pradesh and Telangana reported a notable expansion in client outreach, driven by the entry of multiple MLIs into these markets following a favourable court ruling.
The decline in MLIs client base in FY 2024- 25 was mainly due to increased borrower rejection rates amid rising asset quality stress and indebtedness. A significant reduction in capital inflow further constrained new loan disbursements. Additionally, guardrails issued by the SROs limited multiple lending and reduced borrower overlap across MLIs, which contributed to the contraction in the active client base.
Table 3.3: Client base (in lakhs) of MLIs across States/UTs–March 2025 & March 2024 (in descending order of client outreach)
| State/UT | March 2025 | March 2024 | Y-o-Y Growth (in %) |
|---|---|---|---|
| Karnataka | 88.90 | 90.25 | -1.50% |
| Bihar | 87.20 | 99.61 | -12.45% |
| Uttar Pradesh | 76.17 | 84.03 | -9.35% |
| Tamil Nadu | 71.34 | 83.76 | -14.83% |
| Madhya Pradesh | 42.00 | 47.36 | -11.32% |
| Maharashtra | 39.97 | 40.94 | -2.38% |
| West Bengal | 37.05 | 43.30 | -14.43% |
| Odisha | 34.96 | 43.36 | -19.39% |
| Rajasthan | 25.20 | 32.63 | -22.76% |
| Gujarat | 20.50 | 21.99 | -6.78% |
| Jharkhand | 17.00 | 20.81 | -18.31% |
| Kerala | 15.57 | 18.67 | -16.61% |
| Chhattisgarh | 13.48 | 17.01 | -20.76% |
| Haryana | 12.59 | 12.89 | -2.32% |
| Punjab | 10.39 | 12.99 | -20.02% |
| Assam | 9.02 | 7.02 | 28.48% |
| Andhra Pradesh | 8.24 | 5.67 | 45.34% |
| Telangana | 6.51 | 2.79 | 133.24% |
| Uttarakhand | 3.92 | 4.21 | -6.86% |
| Tripura | 2.69 | 2.79 | -3.73% |
| Puducherry | 1.33 | 1.84 | -27.80% |
| Himachal Pradesh | 0.50 | 0.67 | -24.75% |
| Delhi | 0.45 | 0.49 | -7.72% |
| Manipur | 0.38 | 0.41 | -6.48% |
| Goa | 0.32 | 0.35 | -8.29% |
| Arunachal Pradesh | 0.23 | 0.38 | -39.07% |
| Jammu & Kashmir | 0.22 | 0.42 | -46.72% |
| Sikkim | 0.16 | 0.14 | 14.76% |
| Meghalaya | 0.11 | 0.17 | -34.92% |
| Mizoram | 0.09 | 0.07 | 33.43% |
| Nagaland | 0.09 | 0.20 | -53.69% |
| Andaman & Nicobar Islands | 0.05 | 0.02 | 141.10% |
| Chandigarh | 0.02 | 0.05 | -57.72% |
| Dadra & Nagar Haveli and Daman & Diu | 0 | 0 | 0.00% |
| Ladakh | 0 | 0 | 0.00% |
| Lakshadweep | 0 | 0 | 0.00% |
| Total | 627 | 698 | -10% |
3.3.4 Rural–Urban Share of MLIs Borrowers
MLIs cater to both rural and urban low-income populations. Earlier, the urban borrowers constituted a larger share in India; it can be seen from the graph in Figure 3.8, giving a clear edge to the urban share in FY 2015 and 2016. But the transformation of several large NBFC-MFIs, which operated largely in urban areas, into SFBs had altered this balance. At present, the client base is predominantly rural, with the vast majority of borrowers coming from rural areas. This shift aligns with the demographic structure of India, where nearly 80% of the population still resides in rural regions. Smaller MLIs have typically been rural-centric, though a few have focused exclusively on urban markets.
Figure 3.8: Trends in Rural-Urban Share of MLI Borrowers
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3.3.5 Leading MLIs in Client Outreach
MLIs cater to both rural and urban low-income segments. The figure 3.9 highlights the MLIs with the largest client bases. The list also includes L&T Finance, predominantly an NBFC, but involved in microfinance loans also, and SKDRDP, a BC agent to many banks, owing to their significant outreach in the microfinance industry. If these two are removed, the largest client share is with Credit Access Grameen, followed by Muthoot Microfin and Satin Credit Care, respectively.
Figure 3.9: Top 10 MLIs in terms of Client Outreach (in lakhs) as of March 2025
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The top 10 MLIs collectively account for around 56% of the total client base of the reporting 203 MLIs, while the remaining 193 MLIs account for the remaining 44%. Notably, the top 5 MLIs alone contribute 34% of the overall clientele. SKDRDP’s clients (36 lakhs) may not be relevant to this analysis, as it is operating entirely through the BC model.
Note: (i) The microfinance clients of L&T Finance, an NBFC, is also reflected under the top 10 category.
Box 3.1: Sonali’s determination empowered several fellow women - A success story
45 Sonali, an ordinary woman with determination and compassion, is transforming the lives of several fellow women in the heart of Bhadohi village, Gopiganj, Uttar Pradesh. Armed with determination and compassion, Sonali Sarkar embarked on a mission to empower women in her community through skill development and entrepreneurship.
Her journey began with a simple yet powerful initiative: a Sewing Training Centre that offered sewing training at just ₹50 per month. What set her program apart wasn’t just its affordability; it was Sonali’s commitment to her students’ success. She provided extended training at no additional cost until each woman mastered the skills needed to earn a livelihood. Through her guidance, women learned to stitch blouses and lehengas, opening doors to financial independence they never thought possible.
But Sonali’s dreams did not stop there. Recognizing another opportunity for women’s empowerment, she approached Ambition Services Pvt. Ltd. for a loan of ₹ 45,000. With these funds, she established a beauty parlour, creating a second pathway for women to learn, earn, and grow. To date, she has successfully trained ten young women in beauty services, each graduate becoming a testament to the power of skilled training and mentorship.
Today, Sonali stands as a beacon of hope and inspiration in her village. Her success isn’t measured merely in transactional terms but in the transformative impact she has on her community. As she plans to expand her beauty parlour with additional support from Ambition Services Pvt. Ltd;, her vision continues to grow.
Sonali’s story reminds us that true empowerment creates a ripple effect. Each woman she trains becomes capable of supporting her family and inspiring others to follow her. In a village where opportunities were once limited, Sonali has created a sustainable model of women’s empowerment that continues to grow and flourish, proving that when one woman rises, she lifts her entire community with her.