Microfinance Pulse

Welcome to the 28th edition of Microfinance Pulse Report.

Over the last five quarters (June 2025 – June 2026), India's microfinance industry has navigated a period of significant consolidation, followed by a cautious return to growth. As end of 1st half of calendar year 2026, the sector has 7.15 crore active loans, managing a total portfolio outstanding (POS) of Rs. 2.69 lakh crore.

A Return to Contraction Following Brief Recovery: The industry witnessed a 12% year-over-year contraction in total portfolio outstanding from June 2025 to June 2026. Between March 2026 and June 2026, the sector recorded a 3% quarter-over-quarter contraction, suggesting lenders are following a cautious path. Disbursements during the April–June 2026 (AMJ’26) quarter slipped to Rs. 62,302 crores from Rs. 78,488 crore in JFM’26 although it recorded a 17% annual growth.

NBFC-MFIs Dominate Market Share: NBFC-MFIs continue as the dominant force in the current landscape, commanding nearly half of the industry's active loans, portfolio outstanding, and disbursement amounts. They have successfully captured close to 50% of the industry’s origination volume and value, capitalizing on the market vacuum left by traditional Banks.

Strategic Shift Toward Higher Ticket Sizes: The data reveals a shift in lending strategy, moving away from traditional small-ticket loans toward higher-value disbursements. The segment for loans under Rs. 50,000 is rapidly shrinking. The market share of high-value loans (above Rs. 75,000) surged from 28% in AMJ’25 to 41% in AMJ’26. Continuous growth in Average Ticket Size (ATS) shows that lenders are focusing their capital on existing borrowers with established credit histories who can safely absorb larger loans.

Decline in Industry Risk Profile: One of the positive analytical trends over the last five quarters is the reduction in industry risk. Overall 30+ days past due (DPD) delinquency declined from 6.08% in June 2025 to just 1.89% by June 2026. NBFC-MFIs report the lowest delinquency rates across all lender categories. A vintage analysis shows that originations of calendar year 2025 exhibit healthier repayment behavior.

Geographic Stability and Controlled Borrower Leverage: The risk reduction is visible across major geographic segments. All top 10 microfinance states witnessed a drop in 30+ delinquency alongside their portfolio contraction, with Odisha achieving the lowest 30+ delinquency rate at 1.25%. Bihar remains the largest market, holding 17% of the overall market share. Financial inclusion efforts also continue to yield safe results in the nation's 112 Aspirational Districts, which now account for 16% of the total industry portfolio (Rs. 41,779 crore). 30+ delinquency in these districts fell sharply from 5.84% in June 2025 to just 1.76% in June 2026.