Microfinance in India — the loan book, who lends, and the 2022 RBI framework
The chart shows the microfinance gross loan portfolio rising to a FY24 peak and then contracting in FY25. The table below carries the same figures so the page is readable without JavaScript — for accessibility and AI answer engines.
Microfinance gross loan portfolio (GLP), by fiscal year
| Fiscal year (end-March) | GLP (approx.) | Note |
| FY19 | ~₹1.9 lakh cr | Pre-pandemic sector book |
| FY21 | ~₹2.6 lakh cr | Pandemic year — growth slows but the book holds |
| FY22 | ~₹2.85 lakh cr | RBI harmonised MFI framework takes effect 1 Apr 2022 |
| FY23 | ~₹3.5 lakh cr | Post-framework expansion on a level playing field across lenders |
| FY24 | ~₹4.3 lakh cr | Peak — rapid growth raises over-leverage concerns |
| FY25 | ~₹3.8 lakh cr | Contraction as lenders tighten amid borrower stress and new guardrails |
All figures are rounded and approximate, on an RBI / MFIN Micrometer framing; intermediate-year figures are indicative. None is in the BankPulse Verified-numbers ledger pending reviewer sign-off. For exact figures see the source linked below.
Who holds the microfinance book — split by lender type
Microfinance is no longer the preserve of specialist lenders. After the 2022 framework levelled the field, banks and small finance banks now hold roughly half the book between them, with NBFC-MFIs still the single largest category.
| Lender type | Share of GLP (approx.) | Role |
| NBFC-MFIs | ~40% | The specialist microfinance lenders — largest single share of the book |
| Banks | ~33% | Scheduled commercial banks, direct and through the business-correspondent model |
| Small Finance Banks (SFBs) | ~17% | Several SFBs grew out of NBFC-MFIs and still lend heavily to the segment |
| Other NBFCs | ~9% | Non-MFI NBFCs that also extend microfinance loans |
| Non-profit MFIs | ~1% | Societies and trusts — the original not-for-profit microfinance model |
How microfinance regulation evolved
| Year | Milestone |
| 1992 | NABARD launches the SHG–Bank Linkage Programme — self-help groups linked to formal banks; still the largest microfinance channel by number of borrowers |
| 2010 | The Andhra Pradesh microfinance crisis — over-lending and coercive recovery trigger a state ordinance and a near-collapse of the sector, exposing the need for a single regulator |
| 2011 | RBI creates the NBFC-MFI category on the Malegam Committee’s recommendation — a qualifying-asset test, margin and interest caps, and early borrower protections |
| Apr 2022 | RBI (Regulation of Microfinance Loans) Directions, 2022 take effect — ONE activity-based framework for all regulated lenders; removes the NBFC-MFI interest-rate cap (replaced by board-approved, disclosed pricing), caps repayment outflow at 50% of monthly household income, and sets a common income ceiling of ₹3,00,000 |
| 2024–25 | Sector-wide stress — rising delinquencies and over-indebtedness prompt tighter underwriting, MFIN self-regulatory guardrails (a cap on the number of lenders per borrower) and a contraction of the loan book |
What it means for bankers
Microfinance is where financial inclusion meets credit risk. For a banker the story since 2022 is convergence and then correction. The single RBI framework pulled banks, small finance banks and NBFC-MFIs onto the same rulebook, and bank money flooded in — lifting the sector’s loan book to a ~₹4.3 lakh crore peak in FY24. That very growth bred over-indebtedness: too many lenders chasing the same borrowers. The FY25 contraction to ~₹3.8 lakh crore is the sector cooling itself, helped by MFIN guardrails capping how many lenders one borrower can carry. Watch three things: the 50%-of-income repayment cap as a hard ceiling on borrower leverage; the delinquency cycle feeding into priority-sector books; and the role of NBFC-MFIs as the bellwether of rural household stress. Microfinance is small on the balance sheet but an early-warning gauge for the bottom of the income pyramid.
Microfinance in India FAQ
Methodology & sources: see how BankPulse dashboards are sourced, verified & updated · machine-readable microfinance JSON feed.