Microfinance NPA Surge: Gross NPA Ratio Hits 16% in FY25
Why in the news
Bad loans in India’s microfinance sector climbed steeply, with delinquency almost doubling in a year.
Key facts
| Indicator | Previous year | End of FY25 |
|---|---|---|
| Gross NPA ratio | 8.8% | 16% |
| NPAs in absolute terms | ₹38,000 crore | ₹61,000 crore (March-end 2025) |
Causes
- The joint liability model, long the base of microfinance, seems to be crumbling, worsening repayment.
- Economic pressure on rural and low-income borrowers reduces repayment ability.
Implications
- Strain on MFIs struggling to hold lending models and recover dues.
- Doubts about long-term sustainability of the industry.
- Marginalised communities may lose access to credit that supports their livelihoods.
Way forward
- Improve lending models.
- Strengthen repayment collection mechanisms.
- Give better support to borrowers in distress.
Exam angle
- Terms: gross NPA, delinquency, MFI, joint liability group lending.
- Key numbers: 16% against 8.8%; ₹61,000 crore against ₹38,000 crore.