Microfinance delinquency drops to 1.89% as higher-ticket loans hit 41% share
Synopsis
India's microfinance sector is quietly turning a corner. Delinquency has collapsed from 6.08% to 1.89% in a year, higher-ticket loans now dominate disbursements, and Bihar has become the country's biggest microfinance market. The SIDBI-Equifax data points to a sector that chose quality over quantity — and is now reaping the benefits.
Key Takeaways
Over-30-day microfinance delinquency fell to 1.89 per cent from 6.08 per cent a year earlier, per the SIDBI–Equifax Microfinance Pulse report.
Loans above ₹75,000 now account for 41 per cent of total microfinance disbursements.
Industry portfolio outstanding declined 12 per cent year-on-year to ₹2.69 lakh crore as of June 2026 .
Disbursements grew 17 per cent to ₹62,302 crore in April–June 2026 .
NBFC-MFIs hold 47 per cent of industry portfolio; Bihar leads state-wise with a 17 per cent share.
Average ticket size rose to ₹62,962 from ₹54,681 the previous year.
India's microfinance industry is undergoing a decisive quality shift, with loans above ₹75,000 now accounting for 41 per cent of total disbursements and over-30-day delinquency falling sharply to 1.89 per cent from 6.08 per cent a year earlier, according to a report by SIDBI and Equifax released on 25 September 2026. The findings signal a maturing sector where lenders are prioritising borrower discipline and credit quality over volume growth.
Portfolio and Disbursement Trends
The industry's total portfolio outstanding declined 12 per cent year-on-year to ₹2.69 lakh crore as of June 2026, even as disbursements grew 17 per cent to ₹62,302 crore in the April–June 2026 quarter. The apparent contradiction — a shrinking book alongside rising fresh lending — reflects deliberate portfolio consolidation, with lenders allowing legacy stress to run off while selectively deploying fresh capital.
Shift Towards Larger Loans and Selective Lending
The average ticket size climbed to ₹62,962 from ₹54,681 in the previous year, as entry-level loans below ₹50,000 continued to lose share. The report attributes this to an evolving borrower profile — households and micro-enterprises with established credit histories seeking larger amounts to meet livelihood and enterprise needs. 'Such borrowers are seeking and servicing larger amounts of credit to meet growing household, livelihood and enterprise needs, while lenders are simultaneously directing more capital towards borrowers with established credit histories,' the report noted.
NBFC-MFIs Lead; Bihar Emerges as Top Market
NBFC-MFIs emerged as the largest lender category, commanding 47 per cent of the industry portfolio. Geographically, Bihar has overtaken other states to claim the top spot with a 17 per cent share of the national microfinance market — a reflection of deepening financial inclusion in one of India's most populous states.
What Industry Experts Said
Wilfred Sigler, Managing Director of Equifax India, said: 'The decline in delinquency, coupled with the continued shift towards higher ticket sizes, indicates that lenders are becoming more selective in how they deploy capital and assess borrower capacity.' Sigler added that 'while the contraction in portfolio outstanding reflects a cautious credit environment, the resilience in disbursement value suggests that demand remains present.'
What Lies Ahead
The report highlighted that data-driven underwriting, responsible borrower-level exposure management, and a sustained focus on portfolio quality will be critical for the sector's long-term health. This comes amid broader regulatory scrutiny of over-indebtedness in microfinance — a concern that peaked in 2024–25 when multiple borrowers held loans from several lenders simultaneously. The sharp fall in delinquency suggests corrective measures are working, though a full credit cycle recovery may still take several quarters.
Point of View
But context matters: the baseline was artificially elevated by the over-indebtedness crisis of 2024–25, when aggressive lender competition drove multiple borrowing to unsustainable levels. The portfolio contraction is less a sign of sectoral weakness and more a controlled detox. The real question is whether the shift to higher-ticket lending democratises credit or quietly excludes the most marginalised borrowers — those without credit histories — who were microfinance's original constituency. Bihar's emergence as the top market is worth watching: it signals geographic deepening, but also concentration risk if economic conditions in a single large state deteriorate.
NationPress
25 Sept 2026
Frequently Asked Questions
What did the SIDBI-Equifax Microfinance Pulse report find?
The report found that over-30-day delinquency in India's microfinance sector fell sharply to 1.89 per cent from 6.08 per cent a year earlier, while higher-ticket loans above ₹75,000 now make up 41 per cent of disbursements. It signals a deliberate industry pivot toward quality lending over volume growth.
Why did the microfinance portfolio outstanding shrink even as disbursements grew?
The portfolio outstanding fell 12 per cent year-on-year to ₹2.69 lakh crore as of June 2026 because lenders are allowing older, stressed loans to run off while deploying fresh capital more selectively. Disbursements grew 17 per cent to ₹62,302 crore in April–June 2026, reflecting continued demand even as the overall book consolidates.
Which state has the largest microfinance market in India?
Bihar has emerged as the largest microfinance market in India, accounting for 17 per cent of the national industry portfolio as of the latest report. This reflects accelerating financial inclusion in one of the country's most populous states.
What is driving the shift to higher-ticket microfinance loans?
The shift is driven by an evolving borrower base — households and micro-enterprises with established credit histories seeking larger amounts for livelihood and enterprise needs. Lenders are also channelling more capital toward borrowers with proven repayment capacity, pushing the average ticket size up to ₹62,962 from ₹54,681.
Who are the largest lenders in the microfinance sector?
NBFC-MFIs are the dominant lender category, holding 47 per cent of the total industry portfolio, according to the SIDBI–Equifax Microfinance Pulse report for June 2026.
