Microfinance loan delinquencies jump 163% to Rs 43,000 crore in FY2025

The microfinance sector in India is experiencing a significant surge in delinquencies, with portfolio at risk (PAR), or loans overdue for over 31 days, jumping by 163 per cent to Rs 43,075 crore in the fiscal year ended March 2025, up from Rs 16,379 crore in the previous year.

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This rise in delinquencies reflects the growing stress in the small borrower segment.Significantly, the microfinance industry's gross loan portfolio (GLP) fell to Rs 381,200 crore as of March 2025, marking a 13.9 per cent fall from Rs 442,700 crore a year ago.

Data from CRIF High Mark, a credit information bureau, shows that PAR in the 31-180 days overdue bucket has gone up to 6.2 per cent during FY2025 as against 2.1 per cent in the same period of last year. PAR in the 180 days plus bucket has jumped from 1.6 per cent to 5.1 per cent during the fiscal.“PAR of 91-180 days and 180 plus days (including write-offs) continue to rise, particularly among banks and small finance banks, followed by NBFCMFIs, highlighting persistent challenges,” the agency said.

According to CRIF High Mark, higher-ticket loans above Rs one lakh have experienced an uptick in all delinquency buckets as their share in POS expands, highlighting the need for greater caution. However, its delinquency is much lower than the lower-ticket sizes, it said.Rating firm CRISIL said lending to over-leveraged borrowers was the primary factor that resulted in higher delinquencies for microfinance institutions in the last fiscal. Resultantly, the reported delinquencies in 90 plus DPD (days past due) bucket are estimated to have more than doubled to 6.0 per cent as on March 31, 2025, from 2.4 per cent as on March 31, 2024.