.png)
Microfinance has long been a cornerstone of financial inclusion in India, supporting small businesses and underserved communities. However, the latest Micrometer Q3 FY 2024-25 report unveils alarming trends, raising concerns about the sector's stability and future growth.
📊 Key Industry Insights:
🔺 Surging NPAs:
- Non-Performing Assets (NPAs) have soared to ₹50,000 crore, with a gross NPA ratio of 13%, signaling borrower distress.
🔺 Deteriorating Portfolio at Risk (PAR) (31-180 days):
- Overall PAR: 6.4%, up from 2.0% last year.
- Banks & Small Finance Banks (SFBs): 6.8% & 7.2%, compared to 2.3% & 2.8% last year.
- NBFC-MFIs: 6.7%, up from 1.6% a year ago.
- NBFCs: 3.7%, rising from 1.0% last year.
🔺 Loan Disbursement Slump:
- Total loan disbursements dropped 35.8% YoY, from ₹34,422 crore (Q3 FY24) to ₹22,091 crore (Q3 FY25).
🔺 Declining AUM:
- Assets Under Management (AUM) shrank 6.5% QoQ, now at ₹1.42 lakh crore.
🔺 Regional Trends:
- East & North-East India hold the largest microfinance portfolio share (32%), followed by South India (31%).
- Top 3 states: Bihar, Tamil Nadu, and Uttar Pradesh.
- Highest average loan per account: Tamil Nadu (₹30,952), followed by West Bengal (₹29,290).
âš– Regulatory Developments:
📌 The Karnataka Micro Loan & Small Loan (Prevention of Coercive Actions) Ordinance, 2025 is expected to impact collections and recovery mechanisms in the sector.
🚨 What’s Next for Microfinance?
These trends highlight the urgent need for stronger credit discipline, improved risk management, and enhanced regulatory oversight to ensure long-term sector sustainability.
📩 Want deeper insights and strategic solutions? Connect with us today!