MFI stress erases life cover for 50 mn

Cascading Effect

- NARAYANAN V

THE STRESS IN the microfinance sector led the country's top life insurers to sharply reduce exposure to group credit life insurance, resulting in around 50 million people losing the life insurance cover in FY25, the steepest annual decline on record.

The total loan disbursal by the microfinance industry declined 25% in FY25 to ₹1.12 lakh crore, the latest report of Microfinance Industry Network showed, as lenders cut back exposure and reduced the borrower base in response to rising defaults and credit stress in the sector.

Regulatory filings under Forms L-37 and L-28, which track the number of lives insured, show that HDFC Life Insurance, ICICI Prudential Life, SBI Life and Bajaj Allianz Life have significantly reduced their exposure to this product category in FY25. Both are quarterly disclosures.