Mumbai: India’s microfinance lending sector continued to demonstrate resilience in September 2026, with Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) strengthening their position as the largest lender segment with a 44.7% share of the industry’s portfolio.
According to the September 2026 edition of MicroLend, released by CRIF Credit Information Services Private Limited, India’s Gross Loan Portfolio (GLP) stood at ₹328.4 thousand crore, while disbursement value increased 5.1% year-on-year to ₹56,956 crore in Q2 FY27.
The latest edition of MicroLend, CRIF’s quarterly publication on microfinance lending in India, examines key industry developments as of September 2026, covering portfolio performance, disbursement activity, asset quality, borrower leverage, lender dynamics and regional trends.
The report highlights a continued shift towards larger-ticket loans, increased concentration among borrowers associated with fewer active lenders, and the growing prominence of NBFC-MFIs in India’s microfinance market.
These developments indicate an evolving microfinance lending landscape characterised by borrower consolidation, changing lending patterns and a continued focus on portfolio quality.
India’s Microfinance Portfolio Moderates Amid Industry Consolidation
India’s microfinance Gross Loan Portfolio (GLP) stood at ₹328.4 thousand crore in September 2026, registering a decline of 5.0% year-on-year and 1.4% quarter-on-quarter.
The portfolio comprised 9.6 crore active loans, serving a live customer base of 6.4 crore borrowers.
Despite the moderation in the overall microfinance lending portfolio, average exposure per loan increased to ₹34.2 thousand. This represented growth of 5.8% quarter-on-quarter and 22.7% year-on-year.
The increase in average exposure indicates a shift towards higher loan amounts even as the industry’s overall portfolio contracted.
Microfinance Loan Portfolio Quality Remains Steady
Asset quality across India’s microfinance lending sector remained stable in September 2026, with all reported delinquency categories remaining below 1% for PAR 1-30, PAR 31-90 and PAR 91-180, according to the CRIF MicroLend report.
PAR 31-90 and PAR 91-180 remained unchanged at 0.8%.
Meanwhile, PAR 31-180 stood at 1.6% in September 2026, marking a significant improvement from 4.6% recorded in September 2025.
The improvement in portfolio quality reflects a reduction in loan delinquencies across the sector over the past year.
NBFC-MFIs Strengthen Their Leadership in India’s Microfinance Market
NBFC-MFIs continued to lead India’s microfinance lending industry, accounting for the largest share of the overall portfolio in September 2026.
The segment recorded an outstanding portfolio of ₹146.7 thousand crore, representing a market share of 44.7%.
The NBFC-MFI portfolio registered growth of 9.4% year-on-year and 0.2% quarter-on-quarter, reinforcing the segment’s position as the largest lender category in the industry.
Other NBFCs also recorded portfolio growth during the period. However, banks continued to witness a decline in their microfinance portfolios, partly due to the reclassification of microfinance exposures into retail loans.
The growing contribution of NBFC-MFIs highlights the changing dynamics of India’s microfinance lending market, with these institutions continuing to strengthen their presence.
Microfinance Disbursement Value Rises 5.1% as Average Ticket Sizes Increase
Microfinance disbursements reached ₹56,956 crore in Q2 FY27, registering a 5.1% increase year-on-year. However, disbursement value declined 7.5% compared with the previous quarter.
The average Microfinance Institution (MFI) ticket size increased to ₹63.1 thousand during the quarter, up 1.6% quarter-on-quarter and 17.5% year-on-year.
First-time borrowers, classified as New-to-Credit (NTC) borrowers, accounted for 19.7% of sanctioned loans and 16.5% of the total sanctioned amount during Q2 FY27.
The increase in average ticket size and the higher contribution of larger loans indicate a shift in the composition of microfinance lending disbursements.
Larger-Ticket Microfinance Loans Gain Market Share
Larger-ticket loans continued to gain traction in India’s microfinance lending market during Q2 FY27.
According to the CRIF MicroLend report, loans in the ₹50,000-₹80,000 category accounted for 41.3% of the total origination value during the quarter.
The share of loans in the ₹80,000-₹1 lakh category increased to 18.5% in Q2 FY27, compared with 14.7% in the corresponding period a year earlier.
Similarly, loans with an origination value exceeding ₹1 lakh accounted for 15.1% of the total, up from 11.2% a year earlier.
Disbursement value in the above-₹1 lakh loan category recorded year-on-year growth of 41.3%.
The increasing share of higher-ticket loans highlights the changing borrowing patterns and loan-size distribution within India’s microfinance lending industry.
Borrower Consolidation Supports Microfinance Portfolio Performance
Borrower consolidation emerged as another significant trend in India’s microfinance lending market.
According to the report, borrowers associated with two or fewer active lenders accounted for 81.2% of the overall portfolio in September 2026.
This borrower category also demonstrated better portfolio performance, with PAR 31-180 at 1.9%.
In comparison, borrowers associated with three lenders recorded PAR 31-180 of 4.1%, while borrowers associated with more than three lenders reported a significantly higher delinquency level of 6.6%.
The data highlights the relationship between the number of active lending relationships and portfolio performance, with borrowers associated with fewer lenders demonstrating lower delinquency levels.
Regional Trends in India’s Microfinance Lending Market
The September 2026 CRIF MicroLend report also highlights regional developments across India’s leading microfinance lending markets, including Tamil Nadu, Bihar and Karnataka.
Tamil Nadu Records Quarterly Portfolio Growth
Tamil Nadu recorded a 3.7% quarter-on-quarter increase in its Gross Loan Portfolio (GLP), taking the total to ₹40.3 thousand crore in September 2026.
The state also recorded an improvement in portfolio quality. PAR 31-180 declined from 1.5% in June 2026 to 1.4% in September 2026.
Bihar Remains India’s Largest Microfinance Market Among Top 10 States
Bihar continued to be the largest microfinance market among India’s top 10 states, with a Gross Loan Portfolio of ₹51.1 thousand crore in September 2026.
The state’s PAR 31-180 improved to 1.2% in September 2026, compared with 1.3% in June 2026.
Bihar’s position highlights its continued importance in India’s microfinance lending landscape.
Karnataka and Bihar Record Significant Improvement in Portfolio Quality
The report highlighted substantial year-on-year improvements in portfolio quality across several key states.
- Karnataka recorded a sharp decline in PAR 31-180 from 7.4% to 1.2%.
- Bihar also reported a significant improvement, with PAR 31-180 declining from 4.8% to 1.2%.
These developments indicate improved asset quality across some of India’s key microfinance markets.
Top 10 States Account for 82.3% of Microfinance Portfolio
The top 10 states accounted for 82.3% of India’s overall microfinance Gross Loan Portfolio, highlighting the geographical concentration of the country’s largest microfinance lending markets.
The concentration demonstrates the significant contribution of these states to the overall microfinance industry.
CRIF MicroLend Report Highlights Changing Microfinance Lending Trends
The September 2026 edition of MicroLend indicates that India’s microfinance lending sector continues to consolidate around stronger borrower profiles and larger loan sizes.
While the overall portfolio outstanding moderated during the period, year-on-year disbursement value improved and delinquency levels remained contained.
The report also highlights how regulatory guardrails and greater borrower concentration among a smaller number of lenders continue to support stable portfolio performance.
With NBFC-MFIs accounting for 44.7% of the industry’s portfolio, the lender segment continues to play a significant role in shaping India’s evolving microfinance market.
