India’s average microfinance loan size reached Rs 63,000, a 17.5% rise YoY, even as the sector’s total portfolio contracted. High-value loans saw increased disbursement, while delinquency rates remained stable across most categories.
Microfinance Loan Trends in India
The average microfinance loan size in India increased 17.5 per cent year-on-year to Rs 63,000 in the second quarter of FY27, indicating a growing share of higher-value loans even as the sector’s overall portfolio continued to shrink, according to a report by CRIF Credit Information Services Private Limited.
The report mentioned that the average loan ticket size rose 1.6 per cent quarter-on-quarter in Q2 FY27, reflecting an increase in the disbursement of larger loans, supported by stronger borrower profiles. It said, “Overall average MFI ticket size rose further to Rs 63K in Q2 FY27, up 1.6 per cent QoQ and 17.5 per cent YoY”.
Distribution and Portfolio Analysis
The trend was also visible in the distribution of loan sizes. Loans in the Rs 50,000-Rs 80,000 category accounted for around 41 per cent of the total origination value and remained steady. Meanwhile, the share of loans in the Rs 80,000-Rs 1 lakh category increased to 18.5 per cent from 14.7 per cent a year ago. The share of loans above Rs 1 lakh also rose to 15.1 per cent from 11.2 per cent during the same period.
Despite the increase in average loan size, the overall microfinance portfolio stood at Rs 328.4 thousand crore in September 2026, registering a decline of 5 per cent year-on-year and 1.4 per cent quarter-on-quarter. The portfolio reduction was supported by a moderation in loan originations during the previous quarter, along with policy recalibration, the report said. The sector had 9.6 crore active loans serving 6.4 crore borrowers as of September 2026.
Asset Quality and Lender Performance
On the asset quality front, overall loan performance remained stable. All delinquency categories, including Portfolio at Risk (PAR) 1-30, 31-90 and 91-180 days, remained below 1 per cent as of September 2026. However, PAR 1-30 increased slightly by 10 basis points between June 2026 and September 2026, while PAR 31-90 and PAR 91-180 remained stable at 0.8 per cent.
Among lenders, NBFC-microfinance institutions (NBFC-MFIs) strengthened their position, accounting for nearly 50 per cent of loan disbursements in Q2 FY27, compared with 47.7 per cent in Q2 FY26. NBFCs and small finance banks maintained a share of around 14 per cent in loan originations by value.
Borrower Association Impact
The report also highlighted differences in repayment performance based on the number of lenders associated with borrowers. Borrowers with two or fewer active lenders accounted for 81.2 per cent of the portfolio and recorded PAR 31-180 of 1.9 per cent as of September 2026. In comparison, the delinquency level stood at 4.1 per cent for borrowers associated with three lenders and 6.6 per cent for those with more than three lenders. (ANI)
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