Microfinance portfolio falls 7.6% to ₹3.26 trillion: Sa-Dhan
Why in the news
Data from Sa-Dhan, a self-regulatory organisation for microfinance lenders, showed that India’s microfinance loan book shrank sharply in the year to June 2026, as funding pressure and old bad loans weigh on the sector.
Key facts
- Portfolio: down 7.6% to ₹3.26 trillion at end-June 2026.
- Borrowers: down 15% to 65.4 million; loan accounts down 19.7% to 100.6 million.
- Ticket size: the average loan rose 15% to ₹62,962, as lenders move away from the ₹25,000-50,000 segment.
- Asset quality: legacy loans overdue by more than 180 days rose 440 basis points to 17.4%.
- Income limit: the ₹3 lakh annual household income ceiling for microfinance is under review, with ₹4 lakh and ₹5 lakh suggested.
- Lender cap: an RBI guardrail limits a borrower to a maximum of three lenders.
| Lender type | Portfolio (end-June 2026) | Note |
|---|---|---|
| Banks | ₹79,023 crore | 29.8% share |
| Small finance banks | ₹48,759 crore | down 9.4% |
| NBFC-MFIs | ₹46,884 crore | up 5.2% |
About the wider picture
A NABARD rural economic survey found that households relying only on formal credit fell to 51.2% in March 2026 from a peak of 58.3% in November 2025. MUDRA, which refinances banks, small finance banks and regional rural banks, has been suggested as a dedicated refinancer for MFIs.
Exam angle
- Sa-Dhan is a self-regulatory organisation for microfinance institutions.
- Remember the portfolio size (₹3.26 trillion) and the ₹3 lakh income limit.
- Banks are the largest lender group in microfinance with a 29.8% share.