Microfinance Stress to Ease in Two Quarters: Report

The microfinance industry operates in over 723 districts, including 111 aspirational districts across 28 states and 8 Union Territories. It also caters to the financial needs of almost 8 crore borrowers. MFIs contribute 2.03 per cent of the gross value added to GDP and support 1.3 crore jobs.

- TBG NETWORK

Worst is over for India's microfinance sector, with stress levels posed to ease over the next two quarters, said Axis Securities in its latest report.

Microfinance companies are hopeful that growth will return to normal from the second half of the financial year (FY) 2026. However, the report added that the first half of FY26 is likely to remain tough, with higher loan defaults and slower business expansion.

The report says that key factors such as the ongoing impact of the Karnataka ordinance and the possible effects of a similar law in Tamil Nadu will be worth watching, which could affect lending operations.