Chapter 3 - Section 3.4.5Off-Balance Sheet Portfolio of MLIs

MLIs have utilized securitization and direct assignment to raise capital for business expansion. Additionally, some MFIs have operated as BC agents, enabling them to expand without deploying their own capital. The securitization/BC model creates a mutually beneficial arrangement: it allows banks and financial institutions to strengthen their priority sector portfolios, while providing micro-lenders with the means to address capital constraints, generate steady income through margins, and improve compliance with Capital to Risk-Weighted Adequacy Ratio (CRAR) requirements. Although these portfolios are managed by MLIs, they are classified as Off-Balance Sheet assets.

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3.4.5 Off-Balance Sheet Portfolio of MLIs

MLIs have utilized securitization and direct assignment to raise capital for business expansion. Additionally, some MFIs have operated as BC agents, enabling them to expand without deploying their own capital. The securitization/BC model creates a mutually beneficial arrangement: it allows banks and financial institutions to strengthen their priority sector portfolios, while providing micro-lenders with the means to address capital constraints, generate steady income through margins, and improve compliance with Capital to Risk-Weighted Adequacy Ratio (CRAR) requirements. Although these portfolios are managed by MLIs, they are classified as Off-Balance Sheet assets.

As of March 31, 2025, MLIs in India reported a total Managed Portfolio, classified as off- balance sheet assets, of nearly ₹72,930 Cr., compared to ₹79,410 Cr. at the end of the previous FY 2024-25. This reflects an overall decline of (-8%) in the Managed Portfolio of the Micro-Lending Institutions during FY 2024-25. The total BC portfolio accounted for 22% of the overall Gross Loan Portfolio of micro-lending institutions. The category-wise distribution of the Managed Portfolio across different MLIs is illustrated in Figure 3.13.

Figure 3.13: Managed/Securitized Loan Portfolio of MLIs (in ₹ Cr.) –Yearly Trend and Category–wise Breakup as of March 2025

A further segregation of the Managed Loan Portfolio based on the legal forms of MLIs and the size of MLIs is given below:

Note: In the decadal trend graph of the Managed Portfolio (2015–2025) shown above, the Managed Portfolio for each year is represented by blue bars, covering all Micro Lending Institutions (MLIs). For FY 2024-25, however, the total Managed Portfolio of ₹72,930 Cr. has been further disaggregated to provide clearer insights. The breakdown highlights pure MFIs (NBFC-MFIs, Societies, Section 8 Companies, Trusts, MACS, or Cooperatives) shown in red, NBFCs in green, and Private & Public Ltd. Companies in orange, offering a clearer picture of the growth pattern of pure MFIs.