Guardrails & restrictions put by lenders to MFIs, cause negative growth in microfinance sector

Microfinance, withallits pluses and minuses, has emerged as a cornerstone of India’s socio-economictransformation, fostering financial inclusion and empowering women,small and marginal farmers, artisans, and other vulnerable communities.

- RITWIK MUKHERJEE

Millions have been able to access timely and collateral free credit, enabling them to build sustainable livelihoods and enterprises. That's what Shaji KV, Chairman, NABARD, feels. It is pertinent to mention here that the most widely discussed issue contributing to the sector-wide stress is the overleveraging of credit, driven by increased borrower exposure anda higher number of lenders. Sensing it, the industry leaders and Self-Regulatory Organisations had come up with additional guardrails, the first set was issued in July 2024 and the next set in April 2025.