India MFIs See Revival, Focus Shifts to Quality

India's microfinance sector is exhibiting promising signs of recovery after a two-year slowdown. Lenders are now strategically emphasizing asset quality and portfolio consolidation rather than aggressive loan growth. As of March 31, 2026, the sector's outstanding portfolio stood at ₹2.77 trillion, supporting 7.6 crore active loans.

Disbursements in the January-March quarter of FY26 reached ₹78,938 crore. NBFC-MFIs continue to lead, representing nearly half of the industry's active loans, loan book, and disbursements. These entities are concentrating on higher-value lending, with an average ticket size of ₹82,377, significantly above the industry average of ₹62,945.

This recovery follows a period of moderated growth in FY24 and FY25, after a robust expansion post-pandemic. The current focus on risk management, rather than solely customer acquisition, has successfully maintained delinquency levels and enhanced portfolio quality through improved ticket sizes.