The overall microfinance gross loan portfolio contracted to ₹3.34 lakh crore at the end of April, down from ₹3.39 lakh crore a month ago, according to data from Equifax. This decline was primarily driven by private lenders, who experienced a 5% month-on-month exposure drop during what industry executives describe as a traditionally muted period for credit demand. Lenders attributed this contraction to the typical slack first quarter pattern when credit demand remains muted, with one senior bank executive noting that "April always shows a degrowth. In fact, the first quarter is moderate in terms of credit disbursement," adding that "credit picks up before the festive season in the second quarter and the trend goes on till the fourth quarter."
Private banks' microfinance loan outstanding stood at ₹85,165 crore as of April 30, compared with ₹89,548 crore a month prior, reflecting a 4.9% month-on-month drop. Small finance banks also contracted their portfolio further to ₹49,712 crore from ₹50,725 crore for the same period. As reported by Equifax, microfinance loan disbursement in April was approximately 20% lower than in March, with one managing director noting this typical seasonal pattern. The microfinance market had shown a rebound after seven successive quarters of intense portfolio contraction following asset quality stress before this latest contraction.
Despite the overall market contraction, non-banking financial companies-microfinance institutions (NBFC-MFIs) continued their growth trajectory, with their cumulative gross portfolio reaching ₹1.43 lakh crore at the end of April, up from ₹1.42 lakh crore as of March 31. Other NBFCs also expanded their cumulative portfolio to ₹46,652 crore from ₹46,158 crore over the same period, according to Equifax data. This growth pattern demonstrates the resilience of non-bank lenders in maintaining their market share despite challenging conditions in the broader microfinance sector.
The microfinance market in April marked a 9% year-on-year contraction, with loans disbursed between May 2025 and April 2026 being 4% lower than the previous year. However, Equifax reports show positive year-on-year growth in disbursements for Bihar, Uttar Pradesh, Rajasthan and Jharkhand. The industry recorded a steady decline in 30+ day delinquency rates across all lender categories, with NBFCs and small finance banks reporting lower delinquency rates compared to the overall industry average as of April 2026.
