Rural Entrepreneurship Fuels Microfinance Growth as Institutions Hold Lending Rates Steady

Microfinance sector expected to grow 10 to 15% at the end of FY2026-27

Rural livelihoods enhancement and entrepreneurship to drive demand for lending

Microfinance institutions will keep lending rate unchanged, will absorb the repo rate hike

The microfinance sector is expected to grow at over 15% in the third and the fourth quarters of the current financial year, micro lending institutions’ leaders said at the 21st annual conference on inclusive growth, organised by Sa-Dhan.

Chandra Shekhar Ghosh, founder and Chairman, Bandhan Group was felicitated at the conference for his exemplary contributions to bringing formal credit to people in rural areas. He had started Bandhan with a loan from a moneylender in 2001, and over the years has built an NGO to a microfinance institution and now to a universal bank. Speaking on the occasion Shri Ghosh said, “Serving women and transforming their families through income generating loans has been the contribution of Bandhan. Discipline in underwriting and lending, supervision at the ground and the entity level, wealth creation through mutual funds and resilience through insurance, and IT for enhancing efficiency has led to the scale Bandhan has achieved.”

Speaking at the conference, V Vaidyanathan, CEO, IDFC First Bank said, “Microfinance is at the intersection of business and social service; 90% of the microfinance lending is to women borrowers for entrepreneurship such as for making agarbatti, chappals, papad and for dairying. Over 50% of the borrowers are Below Poverty Line card holders. Technology adoption is enhancing productivity, with disbursements directly into the bank accounts and collections through UPI autopay; it is adding to the confidence to lend. We have had a good experience with lending to this sector, with self-regulation and the guardrails, the sector has the potential to grow its loan portfolios substantially in the future.”

Dr Shaji Krishnan V, Chairman, NABARD said, “For over 50% of SHG members, who are women, microfinance is their point of entry into the financial sector; they subsequently graduate to entrepreneurship. NABARD aims to make everyone’s bank better, NABARD has built a technology infrastructure for the cooperative banks which is helping them serve customers better, like intimation over sms or WhatsApp for every transaction. The sector should also leverage technology like the agristack which provides a wealth of anonymized data that allows for a granular view, reduces cost of underwriting, allows for climate-adaptation financing and enables fintechs to build solutions for the rural sector.

NABARD supports the sector through capacity building of microfinance institutions, and is also focussing on enabling entrepreneurship among the youth. The Government is also supporting the sector by encouraging private capital into rural financing as the sector is integral to realizing the Viksit Bharat vision.”

Dr K Paul Thomas, MD & CEO, ESAF Small Finance Bank and Chair, Sa-Dhan said, “Self-regulation in the microfinance sector has been effective, and the sector has prioritized discipline in underwriting over growth. The microfinance loan is for livelihood finance enhancement and diversification, and the average ticket size of loans is increasing towards Rs 75,000 from Rs 50,000 earlier. The NCAER study has also shown the impact on the society and local communities from turning borrowers into entrepreneurs. The sector has emerged stronger from the stress of the last two years, major credit for it goes to the frontline employees.”

The Bharat Microfinance Report was also released at the conference. The report draws on data from Credit Information Companies, Micro Lending Institutions, NABARD and other stakeholders to provide a comprehensive view of the sector. 178 Micro Lending Institutions shared their data, which represents more than 98% of micro-lending business in India.

Jiji Mammen, Executive Director & CEO, Sa-Dhan added, “FY2025–26 can be characterised as a period of consolidation and recalibration, with lenders focusing on strengthening portfolio quality, controlling borrower indebtedness, improving collections and restoring sustainable credit growth. The third set of guardrails from industry leaders and SROs, issued in April 2026, have strengthened credit discipline. The sectoral outlook is expected to further improve in the current financial year.”

SAVE Microfinance Receives ₹70 Crore in Funding in FY 2026–27, Including ₹55 Crore under CGSMFI-2.0

SAVE Microfinance Private Limited, a microfinance institution focused on advancing responsible and inclusive finance across India, has received ₹70 crore in total funding during the current financial year (FY 2026–27).

Of the total funding, ₹55 crore has been received under the Credit Guarantee Scheme for Microfinance Institutions (CGSMFI-2.0), comprising ₹25 crore from Indian Overseas Bank (IOB) received in June 2026 and ₹30 crore from State Bank of India (SBI) received in August 2026.

The company has also received ₹15 crore through other institutional funding facilities, including funding from Northern Arc Capital, further strengthening and diversifying its institutional funding base.

The latest funding milestone reinforces the continued confidence of leading banks and financial institutions in SAVE Microfinance’s business model, portfolio quality, governance standards and disciplined approach to sustainable growth.

The funds will support the company’s lending operations, strengthen its ability to meet the growing demand for responsible credit, and expand access to formal financial services across underserved and semi-urban and rural markets.

Strengthening Institutional Confidence

Commenting on the funding milestone, Mr. Pintu Kumar Singh, Chief Financial Officer, SAVE Microfinance Pvt. Ltd., said: "The receipt of ₹70 crore in funding during the current financial year, including ₹55 crore under CGSMFI-2.0, is a significant milestone for SAVE Microfinance. We are grateful to our banking and financial institution partners for their continued confidence in our financial discipline, portfolio quality and governance framework. The additional funding will strengthen our lending capacity while enabling us to maintain a balanced approach to growth, risk management and responsible finance.”

He added: “As we continue to explore additional institutional funding opportunities, our focus remains on building a diversified funding base and ensuring sustainable access to credit for underserved households and micro-entrepreneurs.”

Supporting Responsible and Inclusive Growth

Commenting on the milestone, Mr. Ajeet Kumar Singh, Managing Director & Co-founder, SAVE Solutions Private Limited (SAVE Group), said: "At SAVE, we view financial inclusion as an important enabler of sustainable social and economic progress. The continued support from leading financial institutions is a strong endorsement of our approach to responsible finance, disciplined growth and institutional governance. The ₹70 crore funding received during FY 2026–27 will further strengthen our ability to serve underserved communities and support livelihoods through timely and responsible access to credit.”

He further added: “The ₹55 crore received under CGSMFI-2.0 is particularly significant as we continue to deepen our institutional partnerships and diversify our funding sources. With further opportunities in the pipeline, we remain committed to strengthening our financial capabilities and expanding the reach of inclusive financial services across India.”

Diversifying the Funding Base

SAVE Microfinance continues to engage with banks, financial institutions and development-focused lenders to build a well-diversified and sustainable funding base.

The company remains focused on responsible credit delivery, technology-enabled operations, prudent risk management and sustainable portfolio growth, with the objective of expanding access to formal finance for low-income households, women borrowers and micro-entrepreneurs across its operating geographies.

The company will continue to leverage institutional partnerships and initiatives such as CGSMFI-2.0 to strengthen its financial capacity and support the evolving credit needs of underserved communities.

About SAVE Microfinance Private Limited

SAVE Microfinance Private Limited is part of SAVE Solutions Private Limited (SAVE Group) and is focused on expanding access to responsible and inclusive financial services for underserved communities. The company works towards enabling access to formal credit while maintaining a strong focus on responsible lending, disciplined growth, prudent risk management and sustainable impact.

MFIN Micrometer Q4 FY26 signals microfinance recovery with 3% portfolio uptick, improved credit quality, and diversification analysis.

Micro Finance Industry Network (MFIN) released the 57th edition of Micrometer for Q4 FY 25-26 based on the industry data as on March 31, 2026. Micrometer is the flagship publication of MFIN which covers progress of Indian microfinance industry on a quarterly frequency.

MFIN is an industry association of Banks, NBFC-MFIs, SFBs and NBFCs providing microfinance and India’s first RBI-recognized self-regulatory organization.

Report insights

The 57th edition of Micrometer brings two important additions to the publication. From this edition, there is a dedicated analysis of portfolio diversification, tracking the mix and performance of microfinance and non-microfinance portfolios, along with on- and off-balance sheet exposures across NBFC-MFI size categories. This reflects the evolving business models of MFIs following the regulatory flexibility on qualifying asset norms. The Other Regulated Entities section, introduced in the last edition, continues to evolve as a comprehensive analysis of the microfinance activity of banks, SFBs and NBFCs who are MFIN members.

As of March 31, 2026, microfinance operations are spread across 36 States/UTs and 721 districts. Data for Q4 FY 25-26 indicates early signs of recovery in the sector. After seven quarters of portfolio contraction, this quarter witnessed a QoQ uptick of over 3%. As on March 31, 2026, the industry portfolio stands at Rs 3,25,174 Cr. The portfolio expansion rode on quarterly disbursement of Rs 77,524 crore, which is also the highest in last seven quarters, though still less than the peak achieved in Q4 of FY 23-24. The portfolio inched up but despite seven quarters of contraction, the credit quality has returned to pre March 2024 levels. PAR 31-90 days was 0.8% as on March 31, 2026, and PAR 91-180 days at 1.2%. Both PAR metrices have been showing a gradual improvement over last eight quarters.

NBFC-MFIs remain the largest provider of microcredit, accounting for 44.2% of the total industry portfolio, followed by banks at 32.7%, while SFBs and NBFCs constitute the remaining share. While YoY, all entities have shown decline in outstanding portfolio, the decline is highest for banks at -30% and lowest for NBFC-MFIs at -2.7%. The funding squeeze for small MFIs was pronounced during the year; in break-up of outstanding liabilities from various sources for small MFIs, as All India Financial Institutions kept away from small players, Banks, NBFCs and ECBs were the primary sources, albeit lower than previous years.

On a regional and state level, Eastern region continues to be the top shareholder with 36.6% reflecting the focus on microfinance in underserved region. Top 3 states in terms of portfolio share are Bihar, UP and Tamil Nadu and top ten states account for ~80% share.

Dr. Alok Misra, CEO & Director of MFIN said “We can now say that despite the tough 2 years, Industry is turning the corner as evidenced by uptick in portfolio and continued improvement in Portfolio at Risk – PAR 31-180 declining to 2.0% as of March 2026 compared to 6.3% a year ago. A significant policy development which will further strengthen this recovery is the CGSMFI 2.0 scheme of Government of India. Recent extension of the scheme till August 2026 will allow sufficient time for utilisation. The sector is grateful to the Government, and the sector has done its part also by way of improved performance metrics riding on MFIN Guardrails, it is time for banks to come forward and actively support the cause of financial inclusion.

While these positive factors augur well for the sector in 2026-27, MFIN has also advised the players to keep in consideration the likely impact of lesser than average monsoon prediction and West Asia conflict as these may affect rural livelihoods”.

Govt Launches Mobile App to Provide User Friendly Digital Interface to Source Loan Applications of Street Vendors

To provide credit for working capital to street vendors to resume their business, Prime Minister recently launched Street Vendors AtmaNirbhar Nidhi (PM SVANidhi) Scheme. While the Scheme provides the credit facility to the vendors, there is a requirement to ensure that they are able to do business in a harassment free environment.

To solve this, Union minister Hardeep Singh Puri has launched a mobile app for urban local bodies to source loan applications from street vendors under the PM SVANidhi scheme.

This App aims to provide user friendly digital interface for the functionaries of ULBs to source loan applications of street vendors.

Hon'ble Minister received feedback from states/UTs. He urged the Ministers of Urban Development and senior officials to hold meetings with key stakeholders towards successful implementation of PM SVANidhi and also to ensure the protection of livelihood of street vendors.

During the interaction with the Hon’ble Urban Development Ministers, it was decided that Ministry will conduct complete socio economic profiling of the scheme beneficiaries with an aim to facilitate their actions in other government welfare schemes e.g. PMAY (Urban), Aayushman Bharat, Ujjawala, Jan Dhan Yojana, Saubhagya, DAY-NULM etc. During his interaction, Shri Hardeep Puri said that “States are encouraged to dovetail other schemes for economic upliftment of vendors e.g. Mudra/DAY-NULM credit for purchase of modern pushcarts in place of traditional thelas. With regard to undue harassment of the street vendors by police/municipal officials, action should be initiated against the erring officials by fixing responsibility. Further, to help beneficiary raise their grievances in a conducive environment, a forum chaired by District Collector and having representation of police/ULB and other relevant departments should be constituted. The Forum so constituted should meet atleast once in a month."

Observing that PM SVANidhi is not only a micro-finance scheme, the Housing Minister stated that it has a more ambitious objective to formalise the street vendors into urban economy and to provide a complete poverty alleviation package by facilitating their access to various other government schemes. It was decided that further meetings will be conducted with the lending institutions in coordination with DFS.

Since commencement of online submission of applications on PM SVANidhi portal on 2nd July 2020, more than 5.68 lakh applications have been received and over 1.30 lakh have been sanctioned in different States and UTs. With the purpose of taking the microcredit facility to the door step of the vendors a Mobile App for Lending Institutions has already been launched by the Ministry and is available on google play store.

PM SVANidhi was launched by the Ministry on June 01, 2020, for providing affordable Working Capital loan to street vendors to resume their livelihoods that have been adversely affected due to Covid-19 lockdown.

This scheme targets to benefit over 50 lakh Street Vendors who had been vending on or before 24 March, 2020, in urban areas including those from surrounding peri-urban/ rural areas. Under the Scheme, the vendors can avail a working capital loan of up to Rs. 10,000, which is repayable in monthly instalments in the tenure of one year. On timely/ early repayment of the loan, an interest subsidy @ 7% per annum will be credited to the bank accounts of beneficiaries through Direct Benefit Transfer on quarterly basis. There will be no penalty on early repayment of loan. The scheme promotes digital transactions through cash back incentives up to an amount of Rs. 100 per month. The vendors can achieve their ambition of going up the economic ladder by availing the facility of enhancement of the credit limit on timely/ early repayment of loan.


~ Press Information Bureau

India Microfinance Market to Grow at over 40% until 2025 - Research

Government push for the growth of small and medium enterprises and lower-income groups driving microfinance market in India

According to TechSci Research report, “India Microfinance Market By Type, By Bank Type, By Non-Banks, By End-Use, By Area, By Region, Competition, Forecast & Opportunities, 2025”, microfinance market in India is anticipated to grow at a brisk CAGR of more than 40% during 2021 – 2025, predominantly on account of increasing demand for microfinance loans from the country’s MSME sector. The main objective of microfinance organizations is to provide a chance to low-salary borrowers to become self-sufficient. This sector plays an important role in promoting inclusive growth by providing credit to borrowers who fall under BPL category. This industry is also helping the women, especially from rural areas, to avail small loans at affordable rates. 

 "India Microfinance Market"

Microfinance market in India can be segmented based on By Type, By Bank Type, By End-Use, By Area, and By Region. Based on types, India microfinance market is segmented into banks and non-banks. In India, bank are the preferred sources for microfinance. Banks dominated the market in 2020 and the trend is likely to continue in the forthcoming years as well. This is due to banks offering attractive interest rates compared to non-banking institutions.

In terms of Bank Type segmentation, the market is categorized into small finance banks, commercial banks, regional rural banks, and cooperative banks. Small finance banks accounted for the largest market share in 2020 and the trend is expected to continue during the forecast period. By End-Use, the market is segmented into Agriculture and Allied, Services, Trade & Business, Education, Production/manufacturing, and others. Agriculture and Allied segment dominates the end use segment of microfinance market in India. Region wise, India microfinance market is segmented into North, South, West and East regions. South region accounted for the highest market share in 2020, followed by West, North and East regions. The East region is foreseen to witness fastest CAGR during the forecast years. 

Major players operating in India microfinance market include Jana Small Finance Bank Limited, Belstar Investment and Finance Private Limited, Ujjivan Small Finance Bank Limited, Satin Creditcare Network Limited, Annapurna Microfinance Pvt. Ltd, BSS Microfinance Pvt. Ltd, Fusion Microfinance, Future Financial Services Private Limited, Asirvad Microfinance Pvt. Ltd, Mudra Microfinance, and Others. Growing technological advancements and government initiatives towards digital innovations like ‘Broadband for All’, which aims to cover over 200,000 villages in India, will reduce the barrier for the adoption of MFI, which will further boost India microfinancing market over the next five years. Moreover, low interest rate scenario along with increasing urbanization would further steer growth in India microfinance market during forecast period.” said Mr. Karan Chechi, Research Director with TechSci Research, a research based global management consulting firm.

“India Microfinance Market By Type, By Bank Type, By Non-Banks, By End-Use, By Area, By Region, Competition, Forecast & Opportunities, 2025” has analyzed the potential of microfinance market across the country, and provides statistics and information on market sizes, shares and trends. The report will suffice in providing the intending clients with cutting-edge market intelligence and help them in taking sound investment decisions. Besides, the report also identifies and analyzes emerging trends along with essential drivers and key challenges faced by India microfinance market.

Neobank Kaleidofin launches 'KaleidoPay' to Enable MFI Customers Make Digital Payments for Loans

• Kaleidofin today announced introduction of KaleidoPay, a service that enables digital payments for MFI customers


• Samasta Microfinance  is one among the first set of institutions to integrate Kaleidopay for loan collections.

Kaleidofin Private Limited is a neobank whose mission is to propel customers towards their real-life goals by providing intuitive and tailored financial solutions. Designed for the informal customer segment, Kaleidofin uniquely combines a tech and touch model to effectively reach out to its customers. It has network partnerships with over 35 institutions such as MFIs, Cooperative Banks, Corporate Houses and NGOs, who provide the last mile connect to the customers. 

Kaleidofin today announced the launch of KaleidoPay, a suite of payment solutions that allows customers of NBFCs, who usually pay in cash, to get set up easily on digital payments. Samasta Microfinance Limited, a subsidiary of IIFL, with  1.2 million active customers across 16 states in India will be one of the first financial institutions to offer KaleidoPay to its customers as a service that will enable its customers to pay loan EMIs to Samasta 

Venkatesh N , Managing Director ,Samasta Microfinance Limited, “We have been working with Kaleidofin for over 2 years and have seen the acceptance of their digital goal linked financial solutions services amidst our customers. We are excited about implementing digital payments through KaleidoPay. We believe inclusive digital payments that solve for the microfinance customer is the need of the hour with the social distancing being the new norm. It will also drive long term operating efficiencies and allows our staff to devote more time to customer knowledge and building even deeper relationships with the customer”.

KaleidoPay focuses on digitising payments such as EMIs, savings contributions or insurance premium. Machine learning algorithms deployed in KaleidoPay, identifies common issues such as blurry picture or errors in filling mandates in real time for services such as Nach mandate set up. It helps customers/agents to rectify the problem immediately rather than waiting for the next visit. 

Through KaleidoPay, institutions can activate digital payments and payment mandates for new and existing customers. It can also be activated mid-cycle for multiple loan cycles. KaleidoPay supports payment collection not only from customers who own smartphones but also customers who own feature phones. It is supported by almost all banks including customers holding bank accounts in Grameen Banks, Cooperative Banks, regional rural banks and other scheduled commercial banks. Also coming up under KaleidoPay is access to Bharat Bill Pay system for Kaleidofin’s network partners. 

“MFIs in India serve approximately 56 million households. In the last few years, a majority of them have accessed and used a mobile internet facility for information or communication. Our field interactions with the customers indicate that there is a lot more awareness and willingness to adapt to new online experience- including financial services. We have been using Kaleidopay for 22 months and were pleasantly surprised to see that over 80% of our customer base continued to contribute towards their life goals, even during the crisis. This would not have been possible without the digital payment mechanism set in place via KaleidoPay.” Said Sucharita Mukherjee, Co-Founder & CEO, Kaleidofin Private Limited.

Kaleidofin has also tied-up with two other MFIs and is in talks with three other MFIs to implement KaleidoPay.

Samasta Microfinance Limited, an IIFL Group company, is a microfinance institution committed to working towards women’s economic empowerment. Since its inception in March 2008, Samasta has been providing innovative and affordable financial products to women from unbanked sections in society in both rural and semi urban areas. The organisation caters to 16 states across India, Samasta with its wide array of responsible financial products and services acts as a catalyst for sustainable and inclusive economic growth. Samasta is leveraging innovative technology solutions to enable customers to enjoy the benefits of digitisation and it aims to create economic opportunities for all and to improve the standard of living in the communities it serves.

As part of its Corporate Social Responsibility initiatives, Samasta has established financial literacy centres for customers to equip them to make smart financial decisions for a secure future for themselves and their families.

Micro-Finance Firm Satin Creditcare gets $15 Mn ECB Funding from Development Bank of Austria

Micro-finance company Satin Creditcare Network on Friday said it has received external commercial borrowing funding of USD 15 million (around Rs 107.2 crore) from Development Bank of Austria (OeEB), to accelerate its lending portfolio.

The investment will support Satin Creditcare Network (SCNL) in its planned expansion, portfolio growth and its efforts in increasing financial inclusion through its operations in 22 states, the micro-finance company said in a statement.

This will be the third round of external commercial borrowing (ECB) funding by a foreign institution in SCNL.

The first ECB investment in SCNL was by World Business Capital and second investment was by responsAbility Investment.

"The funding from OeEB will help us to strengthen our ongoing credit lending services to a larger section of existing and potential customer base and accelerate our reach across India," SCNL Chairman and MD H P Singh said.

"Increasing financial inclusion is one of our main strategic goals. We are therefore proud to work with SCNL," Sabine Gaber, Member of the Executive Board of the Development Bank of Austria said. PTI SID

MFIN, Sa-Dhan Collaborate to Launch ‘Code for Responsible Lending’ for Micro-Finance Industry

Microfinance Institutions Network (MFIN) and Sa-Dhan, the RBI recognized self-regulatory organisations and industry associations for the microfinance industry, along with FIDC, have jointly released ‘Code for Responsible Lending’ (CRL) for the micro-credit industry.

The launch was done today at Sa-Dhan’s 15th Annual National Conference in New Delhi. The CRL, which aims to lay down uniform principles for customer-conduct in micro-credit, is sector specific and entity agnostic. In addition to the CRL, a revised industry Code of Conduct (CoC) was also released for Microfinance Institutions (MFIs) that will act as a binding and compulsory set of principles w.r.t. lending practices.

According to Mr. Manoj Nambiar, Chairperson, MFIN, “Microfinance sector has seen a robust growth over the last few years and after the segregation of various entities in this segment, the landscape has evolved markedly.

While it has added to the overall expansion of the industry, it has also presented us with a challenge where there is no uniform regulation for different regulated entities serving micro-credit clients.

This is a significant self-regulatory step across all RBI regulated entities & others that aims at safeguarding the interests of low-income customers through enhancing transparency and compliance.  We are happy to note that over 90 entities have signed up for the CRL as "Responsible Lenders" and are hopeful that soon all microfinance lenders will come forward to endorse and adhere to it.”

Speaking on the launch, Ms Vijayalakshmi Das, Chair, Sa-Dhan, said, “This launch is in line with our objective of furthering responsible finance across the entire sector. Many lenders of diverse legal form are coming on-board, as the Code engages with all those catering to the same microfinance client. 

It is hoped to bring about a level playing field for all and ensure client protection is more adequately addressed. Meanwhile the Industry Code has been strengthened in the areas of risk management, responsible lending and HR practices which includes training and client education.”

A significant development in the CRL adoption was the signing up of the Finance Industry Development Council (FIDC), the Self-Regulatory Organization for Registered NBFCs. This makes the CRL more inclusive in its coverage.

Mr Raman Aggarwal, Chairman - FIDC, said, “We are pleased to sign the Code for Responsible Lending along with MFIN and Sa-Dhan. The NBFC sector has been going through a challenging scenario for the last one year where banks, which are the major source of funding, have become risk averse.

CRL shall be a step in the right direction to restore the confidence in the Non-Bank lending community, as this shall bring better discipline and harmony among the Asset Financing, Loan Financing and Micro Financing NBFCs.”

Over the last two decades, the micro-credit sector has successfully mainstreamed itself as a key delivery channel to provide credit to low-income households. Currently a wide range of Providers such as NBFC-MFIs, Banks, SFBs, NBFCs and Non-profit/Section 8 MFIs, under different regulatory framework, provide micro-credit to over 5 crore customers from low-income households. Building on key regulatory customer-protection measures as described in RBI Master Directions for NBFC-MFIs, RBI Fair Practice Code for Banks and NBFCs, Industry Code of Conduct and RBI Charter of Customer’s Rights for micro-credit sector, CRL includes most critical elements which are required to be adopted by providers while delivering micro-credit loan.

One of the major guidelines in CRL mandates that only three microcredit entities can lend to a client at the same. This means that if a client has three active loans from any

Provider, then a fourth entity will not be able to lend to the client. NBFC-MFIs are additionally required to ensure that not more than 2 NBFC-MFIs lend to a customer. Moreover, prior to sanctioning of loan, a micro-credit provider should ensure that the total indebtedness should not exceed Rs 1 lakh per customer.

Further, the revised industry Code of Conduct (CoC) released by MFIN and Sa-Dhan for the microfinance sector aims to enhance responsible lending behavior and practices which is central to customer welfare. Given that customers of micro-credit may not always fully understand the product and its impact, it is imperative that providers take greater responsibility to ensure that customers’ interests are protected through internalizing these practices.

Both CRL and CoC aim at promoting and advancing ‘responsible lending’ practices in the microfinance. A microfinance customer as defined by the RBI (for NBFC-MFIs) is a person with an annual household income of Rs 1 lakh in rural India and Rs 1.6 lakhs in urban India.

As per MFIN’s Q1FY20 Micrometer report, the entire microfinance industry has witnessed a growth of 42.9% YoY. Banks hold 40.9% share of the total micro-credit universe while NBFC-MFIs are the second largest provider of micro-credit accounting for 30.2% share. SFBs have total share of 17.0%, NBFCs 10.8% and other MFIs account for 1% share in the microfinance universe.

Microfinance Industry Grows by 38% YoY in FY 2018-19 : MFIN Micrometer

Microfinance Institutions Network (MFIN), an RBI recognized self-regulatory organization and industry association of the microfinance industry in India, in its release issued today stated that the entire microfinance industry has witnessed a growth of 38% over Q4 FY 17-18 with the total loan portfolio (GLP) at Rs 1,87,386 crore as on 31 March 2019. As per Micrometer, the total number of microfinance accounts were at 9.33 crore as on 31 March 2019, showing a growth of 21.9% over Q4 FY 17-18.

Non-Banking Finance Company-Microfinance Institutions (NBFC-MFIs) hold the largest share of portfolio in micro-credit with total loan outstanding of Rs 68,868 crore, which is 36.8% of total micro-credit universe. As on 31 March 2019, aggregated GLP of NBFC-MFIs stood at Rs 68,207 Cr, YoY growth of 47% in comparison to 31 March 2018 and 13% over the quarter ending 31 December 2018.

According to Harsh Shrivastava, CEO, MFIN, “In 2018-19, microfinance in India showed rapid growth, regionally-balanced growth, and resilient growth. Apart from the growth in loan size and loan accounts, the growth of the staff of NBFC-MFIs was also heartening at 34%, now totaling to 1,04,973 people. Eastern India’s growth continues with Bihar and Odisha now ranked 2 and 3 in terms of States. The microfinance industry showed its resilience by growing steadily in spite of liquidity squeeze that all NBFCs faced in Q3 and natural disasters like cyclones and drought. The continuing trust that women borrowers across the nation have in the microfinance model is a matter of pride for all us—and this motivates MFIN to keep promoting responsible finance."

In the microfinance universe, NBFC-MFIs’ share stands at 36.8%, Banks contribute 32.6%, Small Finance Banks have 18.5% share whereas NBFCs’ share is 11% and Non-profit MFIs account for 1.1%.

MFIN Members constitute 53 NBFC-MFIs and collectively they have disbursed 3.25 crore loans worth Rs 82,928 crore during Financial year 18-19. Compared with financial year 17-18, there has been a YoY increase of 28% in number of loans disbursed and 44% in loan amount disbursed.

During FY 18-19, NBFC-MFIs received a total of Rs 35,759 crore in debt funding (from Banks and other Financial Institutions). This represents a growth of 63% compared to FY 17-18. Total equity grew by 42% during the same period and is at Rs 14,206 crore. In terms of regional distribution of portfolio (GLP), East and North East accounts for 38% of the total NBFC MFI portfolio, South 24%, North 14%, West 15% and Central contributes 9%.

As of 31 March 2019, the banks had a microfinance portfolio of Rs 61,046 crore, depicting a growth of 36% over last one year while SFBs showed a growth of around 25%. The NBFCs witnessed the highest growth in portfolio of around 59% over the last year.

The Asset Liability Management (ALM) analysis shows that all sizes of NBFC-MFIs are well placed in terms of ALM across various buckets. The borrowings of MFIs are of longer term while assets are of shorter-term and as a result, they have a comfortable gap as on 31 March 2019 to manage their obligations for the upcoming quarter and up to the next 12 months.

About Microfinance Institutions Network

MFIN is the premier industry association and Self-Regulatory Organization (SRO) for the microfinance industry in India and its current primary members consists of 53 NBFC-MFIs along with 38 Associates including Banks, Small Finance Banks (SFBs) and NBFCs. MFIN works closely with regulators and other key stakeholders to achieve the larger financial inclusions goals through microfinance.

Warburg Pincus Leads $74 Mn Funding of Delhi-based Fusion Microfinance

Delhi headquartered Fusion Microfinance, a leading Non-Banking Financial Company – Microfinance Institution (NBFC-MFI) in India, announced today that it has closed its Series E investment round of INR 520 crores (~ US$73.76 million approx) led by an affiliate of Warburg Pincus LLC (“Warburg Pincus”), a leading global private equity (PE) firm focused on growth investing. The investment round includes both a primary fund raise and secondary sale by early-stage investors. This also marks Warburg Pincus’s first investment in the microfinance sector in India. Creation Investment, an existing investor, has also participated in this round. Early investors - Incofin, NMI ,BIO and SIDBI have made successful exit.

This fundraise follows an internal round that the Company completed in February 2018 and significantly expands Fusion’s capital base to support its high organic growth. The Company also intends to selectively evaluate potential acquisition opportunities and lead the potential consolidation in the Industry. Spark Capital was the exclusive financial advisor to the transaction.

According to Devesh Sachdev, CEO and Founder of Fusion Microfinance, “Since inception, Fusion has done significant work in financial inclusion, women empowerment and entrepreneurship. We are very excited about our partnership with Warburg Pincus. This investment would support our endeavour to develop into one of India’s most preferred companies in the financial inclusion space. We are thankful to Incofin, NMI , BIO and SIDBI for having faith in us early on and being supportive of our journey thus far."


Narendra Ostawal, Managing Director, Warburg Pincus said, “Fusion has had a remarkable journey to become a leading microfinance company in a relatively short period of time. It has demonstrated the ability to profitably scale up in a diversified manner. The company is led by a very talented team, has a robust operating platform and is very well capitalised to become a leader in the financial inclusion space. Warburg Pincus looks forward to backing Devesh and the management team in its next phase of growth."

Fusion Microfinance was established in 2010 and is the youngest company amongst top 10 pure play microfinance companies in India. It has cumulatively disbursed over INR 5000 crores having started in early 2010. Fusion is a rural MFI with a pan-India presence through 500 branches across about 200 under-developed districts in 18 states of India. It has an outstanding portfolio of INR 2,050 crores, as at September 30, 2018, serving more than 1.3 Mn customers and well diversified across 18 states of India.

Fusion Microfinance, headquartered in Delhi, is a microfinance company registered with RBI as an NBFC-MFI. Fusion has won many accolades for being client centric organization. Some of the prominent awards include, ‘PMI Project of the Year Award 2018’ from Project Management Institute of India, ‘Best NBFC MFI Award 2018’ in the category of Customer Literacy and Capacity Building from MFIN, ‘Champions of Rural Markets 2018’ from ET, ‘The Business World Digital India Award 2017’ from Hon’ble Union Minister of India, Shri Ravi Shankar Prasad and ‘Best MFI of the Year Award 2014’ instituted by ACCESS.

Microfinance Industry Witnessed Growth of 51% YoY in Q2 2018-19

The entire microfinance industry witnessed a growth of 51% YoY in Q2 FY2018-2019 with total Gross Loan Portfolio (GLP) standing at Rs 1,46,741 crore according to 27th edition of Micrometer report by Microfinance Institutions Network (MFIN)as on 30th September, 2018. Non-Banking Finance Company-Microfinance Institutions (NBFC-MFIs) have grown by 50% YoY in Q2 FY2018-2019 with GLP of Rs 54,018 crore as on 30th September 2018.

While the total number of active microfinance accounts for the overall industry were at 7.77 crore in Q2 FY2018-2019 with a growth of 27%, NBFC-MFIs witnessed a growth of 32.9% in active loan accounts with 3.43 crore accounts in the same period. The portfolio quality of the entire microfinance industry has also significantly improved during this period as depicted by PAR (Portfolio At Risk) >30 of 0.99% as on 30 September 2018. PAR>30 for NBFC-MFIs has also decreased from 2.87% as on September 2017 to 1.01% as on September 2018.

Speaking on the performance of the industry in the last quarter, Harsh Shrivastava, CEO, MFIN said, “We have seen a healthy improvement in the quality of the portfolio since last one year which is a very encouraging sign for the industry. The growth for overall industry including MBFC-MFIs has shown a good pace which we expect will be maintained in the coming quarters too. We continue to see robust investors’ confidence especially in the NBFC-MFIs segment which is due to sustained credit discipline in the sector.”

Taking into account data for only MFIN’s members, the 48 NBFC-MFIs disbursed Rs 21,001 crore of loans to 84 lakh accounts in Q2 FY2018-2019. In terms of regional distribution of portfolio (GLP), East and North East accounts for 36% of the total NBFC-MFI portfolio, South 26%, North 15%, West 15% and Central contributes 8%. Karnataka, Odisha, Bihar, Tamil Nadu and Maharashtra are the five top states in terms of GLP, accounting for 52% of total loan portfolio of NBFC-MFI segment. Looking at the geographic categorization, 70% of the portfolio for NBFC-MFIs is rural and 30% is urban.

In the microfinance universe, NBFC-MFIs’ share stands at 37% , Banks contribute 33%, Small Finance Banks have 17% share whereas NBFCs’ share is 12% and Non-profit MFIs account for 1%.

Microfinance Institutions Network (MFIN) is the premier industry association and Self-Regulatory Organisation (SRO) for the microfinance industry in India and its current membership/associates consists of 48 leading NBFC (Non-banking Financial Company) Microfinance Institutions (MFIs) in the country. MFIN seeks to work closely with regulators and other key stakeholders to achieve larger financial inclusions goals through microfinance.

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