Mumbai: The microfinance industry's outstanding portfolio declined by 9 per cent in the year to April 2026 due to heightened caution among private banks, a credit information company said on Wednesday.
In what can bring some cheer to the industry battling a host of challenges on asset quality for over a year, assets unpaid for over 30 days declined to 2.5 per cent in April 2026 from 6.4 per cent in the year-ago period.
The report by Equifax said the overall portfolio declined 9 per cent to Rs 3.34 lakh crore in April.
The number of active loans moderated sharply by 21 per cent to 10.28 crore, indicating a preference for lending larger amounts in the industry.
The non-bank lenders showed a better asset-quality trend, and the same cohort also witnessed industry-beating performance on loan outstandings, which were down by 4 per cent in the period, the report said.
The market share of NBFC-MFIs grew to 43 per cent from 39 per cent in the year-ago period and the same for NBFCs grew to 14 per cent from 12 per cent.
Small finance banks maintained their 15 per cent market share during the same period, it said.
However, the private banks seemed very cautious about the business, and the year to April saw their market share decline to 25 per cent from 32 per cent a year ago, Equifax said.
From a geographic reach perspective, the data show that 57 per cent of the overall portfolio outstanding is concentrated in the country's top five states.
It said Bihar, Uttar Pradesh, Rajasthan, and Jharkhand witnessed a positive year-on-year growth in disbursements.
