Chapter 3A - Section 3a.1Distribution of NBFC-MFIs across region and size

NBFC MFIs play an important role in the delivery of microfinance to the poor people. This category of institutions was created by the RBI based on the recommendations of the Malegam Committee in 2012, with a focus on microlending. As per the same, RBI has also fixed certain norms for including an asset as microfinance loans, generally known as qualifying assets and has also fixed its percentage in an institution for registering it as an NBFC-MFIs.

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Performance of NBFC-MFIs in Microfinance

NBFC MFIs play an important role in the delivery of microfinance to the poor people. This category of institutions was created by the RBI based on the recommendations of the Malegam Committee in 2012, with a focus on microlending. As per the same, RBI has also fixed certain norms for including an asset as microfinance loans, generally known as qualifying assets and has also fixed its percentage in an institution for registering it as an NBFC-MFIs.

NBFC-MFIs also have a similar regulatory framework to other NBFCs. In addition, it has something more to consider as an NBFC- MFI. Under the Scale-based Regulation 1, the Reserve Bank of India introduced a regulatory structure for NBFCs, which categorises all NBFCs in four layers based on their size, activity, and perceived riskiness. Out of the total 95 NBFC-MFIs registered with the RBI, 26 fall under the ‘Middle’ layer (non-deposit-taking NBFC with asset size above ₹1,000 Cr.), the rest are under the ‘Base’ layer (NBFC-ND with asset size below ₹1,000 Cr.). Subsequently, the RBI has also released several guidelines for NBFCs, including NBFC-MFIs, over the last five years. These guidelines include the appointment of an internal ombudsman, Prompt Corrective Action (PCA) Framework, and defining the role of Compliance Officers. Additionally, the RBI introduced a new Regulatory Framework for Microloans in 2022.

The retail credit (including Housing Finance, Vehicle Financing, Gold Loans, Education Loans, Consumer Durables, Personal loans, Credit cards, and Microfinance) in India stood at ₹75.2 trillion as of FY24 and has grown rapidly at a CAGR of 16.0% between FY2020 and FY2024. Retail credit growth in FY20 was approximately 12.1%, which decreased to approximately 9.6% in FY21. However, post-pandemic, retail credit growth revived, reaching approximately 13.5% in fiscal year 2022. In FY23, retail credit grew at approximately 22.3% year-over-year. The Indian retail credit market has grown at a strong pace over the past few years and is expected to continue growing at a CAGR of 17-18% between FY24 and FY26, reaching ₹100.9 trillion by FY262 . In terms of asset size and mix, housing loans and infrastructure loans continue to account for a significant portion of the overall NBFC portfolio. Microfinance loans have increased their share in retail loans from approximately 2% to 3% between fiscal years 2019 and 20233 . Considering activity- based classification, credit growth for the second-largest category of NBFCs (in terms of outstanding loans), namely NBFC-IFCs, has increased compared to March 2024. NBFC- MFI’s portfolio contracted in FY2024-25 as lenders exercised prudence in response to the stress in the portfolio4 .

Figure 3A.1: Activity-based5 Credit Growth of NBFCs

3.A.1 Distribution of NBFC-MFIs across region and size

Table 3.A.1: Region-wise distribution of NBFC-MFIs6
Region State/UT No. of NBFC-MFIs
North Delhi (9), Haryana (3), Rajasthan (2), Punjab (1) 15
East Bihar (1), Odisha (4), Jharkhand (1), West Bengal (12) 18
West Gujarat (5), Maharashtra (13) 18
South Karnataka (11), Kerala (1), Tamil Nadu (16), Telangana (3) 31
North East Assam (6), Manipur (1) 7
Central Uttar Pradesh (5), Chhattisgarh (1) 6
Total 95
Table 3.A.2 Size-wise distribution of NBFC-MFIs
Size No. of NBFC-MFIs Gross Loan Portfolio (₹ in Cr.) Share out of the total Portfolio
Small (<₹100 Cr.) 36 1,357 0.83%
Medium (₹100 Cr.–₹500 Cr.) 22 4,735 2.92%
Large (₹500 Cr.–₹2,000 Cr.) 16 17,173 10.59%
Very Large (>₹2,000 Cr.) 16 1,38,898 85.65%
Total 90 1,62,163