Higher-ticket lending gains ground as > ₹75,000 loans rise to 41% of disbursements: SIDBI-Equifax Microfinance Pulse Report
Mumbai: India’s microfinance industry is entering a more measured phase of growth, with lenders prioritising portfolio quality and borrower discipline over aggressive credit expansion. According to the latest SIDBI-Equifax Microfinance Pulse Report, the industry’s portfolio outstanding stood at ₹2.69 lakh crore as of June 2026, down 12% year-on-year and 3% sequentially, while the number of active loans stood at 7.15 crore. Despite the contraction in portfolio size, disbursements during April-June 2026 (AMJ’26) grew 17% year-on-year to ₹62,302 crore, indicating that lending activity is recovering steadily even as institutions adopt a more selective approach to credit.
The shift is increasingly visible in the composition of lending. Disbursements towards loans above ₹75,000 accounted for 41% of the industry in AMJ’26, up from 28% in AMJ’25, while the share of entry-level loans below ₹50,000 continued to decline. At the same time, the industry’s average ticket size increased from ₹54,681 in AMJ’25 to ₹62,962 in AMJ’26. The shift suggests an evolving Indian microfinance borrower, with evolving aspirations to increase the quality of life. 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.
Wilfred Sigler, Managing Director, Equifax India, said, “The microfinance industry seems to be going through an important phase of recalibration, where growth is increasingly being balanced with the quality and sustainability of the portfolio. 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. While the contraction in portfolio outstanding reflects a cautious credit environment, the resilience in disbursement value suggests that demand remains present. Going forward, data-driven underwriting, responsible borrower-level exposure and continued focus on portfolio quality will be critical to supporting sustainable growth in the sector.”
Asset quality strengthens as industry 30+ delinquency falls 419 bps to 1.89%
One of the strongest signals emerging from the report is the improvement in the industry’s asset quality. Overall 30+ days past due (DPD) delinquency declined sharply from 6.08% in June 2025 to 1.89% in June 2026, a reduction of 419 basis points. NBFC-MFIs reported the lowest 30+ delinquency among lender categories at 1.67%, while their portfolio outstanding grew 3% year-on-year to ₹1.26 lakh crore, increasing their market share to 47%. The improvement in credit quality comes alongside portfolio clean-up measures, resolution of legacy stressed accounts and more prudent underwriting practices across the industry.
NBFC-MFIs capture 47% of portfolio as banks’ MFI portfolio continue to contract
NBFC-MFIs have strengthened their position as the largest lender category in the microfinance ecosystem, accounting for 47% of portfolio outstanding as of June 2026. Their portfolio stood at ₹1.26 lakh crore, compared with ₹59,030 crore for banks and ₹35,804 crore for Small Finance Banks. The shift comes against a sharp contraction in the banking channel, with banks’ portfolio outstanding declining 37% year-on-year. During AMJ’26, NBFC-MFIs also accounted for ₹27,387 crore, or nearly 44%, of the industry’s ₹62,302 crore in disbursements.
North and East gain ground as Bihar becomes the largest microfinance market
The geographical composition of microfinance is also undergoing a structural shift, with high-density markets in the North gaining greater prominence. Bihar has emerged as the largest microfinance market, accounting for 17% of industry portfolio outstanding at ₹44,572 crore, followed by Uttar Pradesh at 12% and Tamil Nadu at 12%. Over the five-year period from June 2022 to June 2026, Uttar Pradesh’s portfolio grew 41%, while Bihar’s grew 24%. Importantly, all of the top 10 states recorded a decline in 30+ delinquency between June 2025 and June 2026, with Odisha reporting the lowest delinquency among the top 10 states at 1.25%.
Aspirational districts retain 16% share of industry portfolio as delinquency drops sharply
Microfinance continues to maintain a significant presence across India’s 112 Aspirational Districts, which together accounted for ₹41,779 crore, or 16%, of the industry’s portfolio outstanding as of June 2026. While portfolio outstanding in these districts declined 7% year-on-year and active loans fell 27%, disbursement value increased 3% to ₹41,039 crore during July 2025-June 2026. More significantly, 30+ delinquency in Aspirational Districts declined from 5.84% in June 2025 to 1.76% in June 2026, while 90+ delinquency fell from 3.43% to 1.02%, indicating an improvement in repayment behaviour even amid a more selective lending environment.
Borrower-level guardrails show impact as high multi-lender exposure declines
The report also highlights the relationship between borrower leverage and credit risk. Borrowers with five or more lending relationships recorded 30+ delinquency of 10.68% in June 2026, compared with 3.22% for borrowers with a single lender. However, delinquency among borrowers with five or more lenders has fallen sharply from 23.29% in December 2025 to 10.68% in June 2026. The share of borrowers with four or more lenders also declined from 1.13% in December 2025 to 0.62% in June 2026, indicating the impact of tighter borrower-level guardrails and efforts to moderate over-leveraging.
Overall, the 28th edition of the Microfinance Pulse Report points to an industry in transition: portfolio growth has moderated, but the quality of the book has improved materially, lending is becoming more selective, and the mix is shifting towards larger-ticket exposures and established borrowers. With disbursement value continuing to show year-on-year growth despite a sequential decline, the sector’s next phase is likely to be shaped by the balance between credit demand, borrower leverage, responsible underwriting and sustainable portfolio expansion.
