The Micro Finance Industry Network (MFIN) reported a significant recovery in the microfinance sector with its first quarterly portfolio growth in seven quarters as of March 2026
GS3Economy · S&T · Environment · Security· Growth, inflation & macro indicators· Prelims + Mains·
Why in news
The Micro Finance Industry Network (MFIN) reported a significant recovery in the microfinance sector with its first quarterly portfolio growth in seven quarters as of March 2026.
Background
Loan disbursements reached Rs 77,524 crore in the January-March 2026 period. The portfolio at risk (PAR) declined sharply to 2% as of March 2026 from over 6% in the previous year. Bihar is currently the largest microfinance market in India.
Facts for Prelims
- FactMicrofinance loan disbursements reached Rs 77,524 crore in the January-March 2026 period.
- FactPortfolio at risk (PAR) in the microfinance sector declined to 2% as of March 2026.
- PlaceBihar is the largest microfinance market in India, followed by Uttar Pradesh and Tamil Nadu.
- SchemeCGSMFI 2.0 is a government scheme supporting the recovery of the microfinance sector.
For Mains
Q. Discuss how the microfinance sector contributes to financial inclusion in rural India and the challenges associated with managing portfolio at risk (PAR).
Dimensions to cover in your answer
- Credit accessibility: Bridging the formal banking gap for low-income borrowers in states like Bihar and Uttar Pradesh.
- Risk management: Balancing high-volume small loan disbursements with the necessity of maintaining low portfolio at risk (PAR) levels.
- Policy support: The role of government schemes like CGSMFI 2.0 in stabilizing borrower confidence and improving repayment behavior.
Keywords: financial inclusion · portfolio at risk · microfinance · credit accessibility · borrower confidence
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