Microloan Contraction Stabilises as March Quarter Disbursements Rise Sequentially
The microfinance portfolio continued its contraction as lenders adjusted book size and exposure, adopting cautious lending practices to manage stress
Chennai: While the microfinance industry’s Gross Loan Portfolio (GLP) declined 13.9 per cent in the March quarter on a year-on-year basis, the quarterly disbursements saw 12 per cent sequential rise, indicating improved demand amidst disciplined lending.
The microfinance industry’s Gross Loan Portfolio (GLP) stood at Rs 381.2K crore as of March’25, marking a 13.9 per cent decline against Rs 442.7k crore at the end of March 2024. The GLP was also 2.6 per cent lower than Rs 391.5K crore at the end of December 2024.
The microfinance portfolio continued its contraction as lenders adjusted book size and exposure, adopting cautious lending practices to manage stress. Active loans decreased from 16.1 crore in March 24 to 14 crore in March 25 and the overall active customer count has seen a reduction from 8.7 crore to 8.3 crore. Borrowers with 5 or more lender associations now constitute only 4.9 per cent of the total book, down from 9.7 per cent a year ago, according to Crif High Mark.
Delinquency indicators showed a mixed picture, with early-stage PAR (1–30 days) improving from 1.8 per cent to 1.4 per cent since December 2024, even as longer-term stress (PAR 91–180 and 180+) continued to edge upward.
However, the sector remains on a path of long-term sustainability. While current indicators suggest cautious lending and persistent stress in parts of the portfolio, improvement is visible in higher-quality credit segments.
The disbursements in the March quarter of 2025 rose 12.2 per cent to Rs 71,580 crore against Rs 63,774 crore in the December quarter. However, disbursements were still down 38 per cent against Rs 115,600 crore in the same quarter last year.
Portfolio for loans above Rs 1 lakh grew by 38.5 per cent Y-o-Y, whereas those in the less than Rs 30,000 segment were down by 8 per cent Q-o-Q and 35.9 per cent Y-o-Y — underlining a shift away from smaller-ticket lending.
“As institutions recalibrate and regulatory frameworks evolve, we are confident that the sector is laying the groundwork for stronger and more inclusive growth,” said Ramkumar Gunasekaran, Director and Head of Sales at CRIF High Mark.