India's microfinance firms' portfolio outstanding falls 14% in Q2FY26
India's microfinance firms' portfolio outstanding falls 14% in Q2FY26
India's microfinance firms' portfolio outstanding fell over 14 per cent as of September 30 to Rs3,39,510 crore compared to Rs 4,08,049 crore at the end of the second quarter last fiscal (Q2 FY25), data from a report of Micro Finance Industry Network (MFIN) showed on Friday.
Meanwhile, the microfinance bodies backed by Non-Banking Financial Companies (NBFC-MFIs) are the largest contributor to the sector with 39.2 per cent share in the total MFIs' lending, followed by banks at 31.4 per cent. The Small Finance Bank (SFB) and NBFCs make up the remaining share of the portfolio.
Amid the decline in outstandings, the microfinance portfolio has declined by 16.8 per cent in the second quarter of the current financial year (Q2FY26), the report highlighted.
MFIN stated that as of September 30, microfinance operations are spread across 36 states and UTs and 718 districts.
"Continued funding squeeze has resulted in a sixth consecutive quarter fall in the microfinance portfolio to Rs 3.39 lakh crore. This has resulted in nearly 50 lakh clients going out of formal finance," its CEO and Director, Dr Alok Misra, said.
It is ironic as Portfolio at Risk (31-90 days) has improved to 1.09 per cent, and 98 per cent of clients are within the MFIN Guardrails, showcasing disciplined underwriting in the sector, he added.
