India’s microfinance sector is witnessing a shift towards larger loans and greater concentration among borrowers with fewer active lenders, even as the industry’s overall loan portfolio continues to contract. Non-banking financial company-microfinance institutions (NBFC-MFIs) have strengthened their position as the largest lender category, accounting for 44.7% of the industry’s outstanding portfolio as of September 2026.
According to CRIF’s September 2026 edition of MicroLend, India’s microfinance gross loan portfolio (GLP) stood at ₹328.4 thousand crore, declining 5% year-on-year (YoY) and 1.4% quarter-on-quarter (QoQ). The portfolio comprised 9.6 crore active loans, serving 6.4 crore borrowers.
Despite the moderation in the overall portfolio, disbursement value increased 5.1% YoY to ₹56,956 crore in the July-September quarter of FY27. However, it declined 7.5% compared with the previous quarter.
The average exposure per loan rose to ₹34,200, up 5.8% QoQ and 22.7% YoY, indicating that loan sizes are increasing even as the overall portfolio shrinks. The average microfinance loan ticket size also increased 17.5% YoY to ₹63,100 during the quarter.
Larger loans gain ground
The shift towards higher-value borrowing is particularly visible in the distribution of loan originations. Loans in the ₹50,000-₹80,000 category accounted for 41.3% of the total origination value in Q2 FY27.
The share of loans between ₹80,000 and ₹1 lakh increased to 18.5% from 14.7% a year earlier. Meanwhile, loans exceeding ₹1 lakh accounted for 15.1% of origination value, compared with 11.2% in the year-ago period.
Disbursement value in the above-₹1 lakh category grew 41.3% YoY, highlighting the increasing contribution of larger-ticket loans to the microfinance market.
First-time borrowers continued to account for a share of lending activity, making up 19.7% of sanctioned loans and 16.5% of the total sanctioned amount during the quarter.
NBFC-MFIs consolidate their position
NBFC-MFIs had an outstanding portfolio of ₹146.7 thousand crore in September 2026, registering 9.4% YoY growth and 0.2% QoQ growth. Their market share reached 44.7%, making them the largest lender segment in the industry.
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NBFCs also recorded portfolio growth, while banks continued to see a decline, partly due to the reclassification of microfinance exposures into retail loans.
Borrower concentration and repayment trends
The report also points to greater consolidation among borrowers, with those associated with two or fewer active lenders accounting for 81.2% of the portfolio in September 2026.
This group recorded a portfolio at risk (PAR) of 1.9% for loans overdue by 31-180 days. The corresponding figure was higher at 4.1% among borrowers associated with three lenders and 6.6% among those linked to more than three lenders.
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Overall portfolio quality remained steady, with PAR 1-30, PAR 31-90 and PAR 91-180 each below 1%. PAR 31-180 stood at 1.6%, improving from 4.6% in September 2025.
Among states, Bihar remained the largest microfinance market, with a gross loan portfolio of ₹51.1 thousand crore. Tamil Nadu recorded a 3.7% QoQ increase in its portfolio to ₹40.3 thousand crore.
The top 10 states accounted for 82.3% of India’s total microfinance portfolio, underlining the sector’s continued geographic concentration.