Micro-finance institutions demonstrated robust recovery in Q4FY26, with CreditAccess Grameen reporting 28% year-on-year and 44% quarter-on-quarter disbursement growth at ₹8,313 crore. According to reports from NDTV Profit, this growth signals the industry's successful navigation through two years of heightened delinquencies. Other major MFIs including Muthoot Microfin, Satin CreditCare, and Fusion Finance have also reported similar improvements in key metrics during the quarter.
The sector witnessed substantial improvement in asset quality metrics across all categories. Over 30-days overdue loans reduced to 2.7% in Q4 from 3.8% in Q3 and 5.5% last fiscal, while over 60-days overdue loans decreased to 2.5% in Q4 from 3.4% in Q3. As reported by NDTV Profit, PAR-90 or non-performing loans reduced to 2.3% in Q4 from 3.3% last fiscal. These improvements reflect the industry's disciplined approach to portfolio management and collection efficiency.
MFIs have provided aggressive guidance for FY27 following the improved performance. CreditAccess Grameen guided 20-25% asset growth, 12.8%-13.2% net interest margin (versus 13.4% in FY26), 3-4% credit cost, and 4-4.8% return on assets. According to NDTV Profit, other major MFIs have also provided similar optimistic projections for the upcoming fiscal year. The guidance reflects the sector's confidence in sustained recovery after navigating through the challenging environment.
As reported by NDTV Profit, Ganesh Narayanan, MD & CEO at CA Grameen, attributed the recovery to structured steps taken during the challenging period. The MFI increased internal audit frequency from 60 days to 40 days, supported by real-time analytics. The company prioritized collections first, then portfolio maintenance, and only then growth, while stabilizing operations through continuous training and extensive hiring. Senior leadership provided ongoing direction through extensive travel to provide moral support during the difficult period.
The MFI sector's recovery was supported by new rules issued by self-regulatory bodies that helped business recovery. According to NDTV Profit, these rules bar lending to borrowers with over 3 active loans and households with over ₹2 lakh indebtedness. With these regulatory changes and improved operational practices, the MFI sector appears positioned for continued growth until the next adverse credit cycle begins. The sector has successfully navigated through two years of stress and emerged with stronger fundamentals.
