Microfinance: Delinquencies Drops to 2.5%; Improving Credit Discipline: Equifax Report
FinTech BizNews Service
Mumbai, 27 May 2026: India’s microfinance sector is showing clear signs of stabilisation and improving portfolio health, even as lenders continue to adopt a cautious approach toward fresh credit expansion, according to the latest Microfinance Insights Report - May 2026 released by Equifax.
The report highlights a notable improvement in asset quality across the industry, with the 30+ days past due (DPD) delinquency rate declining sharply to 2.5% in April 2026 from 6.4% in April 2025. The improvement was observed consistently across lender categories, indicating stronger underwriting practices, tighter credit monitoring, and a sector-wide focus on sustainable lending.
“The latest trends suggest that the microfinance sector is undergoing a structural transition toward more disciplined and sustainable growth. Lenders are increasingly balancing growth ambitions with portfolio quality and long-term resilience. The sharp improvement in delinquency levels reflects stronger credit frameworks and a more calibrated risk environment across the ecosystem,” said Head of strategy and Interim MD for Equifax Credit Information.
At the same time, the industry’s total portfolio outstanding stood at ₹3.34 lakh crore as of April 2026, reflecting a 9% year-on-year decline, while active loans moderated to 10.28 crore. Disbursement activity also remained measured, with industry-wide disbursement volumes declining 18% year-on-year and disbursement value declining 4% during the period from May 2025 to April 2026.
Among lender segments, NBFCs reported the lowest delinquency levels across all overdue buckets, reinforcing their focus on prudent underwriting and portfolio monitoring. NBFCs and NBFC-MFIs also witnessed a gradual increase in market share across both disbursements and portfolio outstanding during the year.
The report further noted that the top five states contributed 57% of the industry’s portfolio outstanding, underlining continued geographic concentration within the sector. Bihar, Uttar Pradesh, Rajasthan, and Jharkhand emerged as key growth markets, recording positive year-on-year growth in disbursements despite the broader moderation in lending activity.
The findings point toward a sector that is gradually moving away from volume-led expansion toward a more balanced model centred on credit quality, operational discipline, and long-term sustainability.
