Mumbai, April 28
The micro-finance sector (MFI) in India is projected to grow by 12–15 per cent in FY26 under a conservative scenario, returning to FY24 levels, a report showed on Monday.
In a more favourable environment, particularly if rural incomes recover on the back of a normal monsoon, growth could be a tad better, said MP Financial Advisory Services LLP (MPFASL) in its report.
The MFI sector has consistently demonstrated resilience, having recovered from past disruptions such as demonetisation and the COVID-19 pandemic.
India’s microfinance sector has become a cornerstone of financial inclusion, enabling credit access for underserved populations, especially women, small farmers, and micro-entrepreneurs in rural and semi- urban areas.
With a robust CAGR of 28 per cent from FY14 to FY24, the sector now serves over 7.9 crore unique borrowers across 92 per cent of the country’s districts, demonstrating its deep and widespread outreach.
Looking ahead, the outlook for FY26 remains cautiously optimistic, the report added.
“The microfinance sector is at a pivotal point, balancing sustainable growth with responsible lending. The MFIN guardrails are a timely step to curb over-indebtedness and strengthen asset quality, though they may create short-term operational and financial strain, especially for smaller MFIs,” said Mahendra Patil, Founder and Managing Partner, MP Financial Advisory Services LLP.