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Microfinance sector shows signs of recovery in Q4FY26 after prolonged period of challenges: MFIN
Jun-15-2026

The Micro Finance Industry Network (MFIN) in its latest report said that after a prolonged period of challenges, the microfinance sector has shown early signs of recovery with the industry portfolio witnessing a sequential uptick in the fourth quarter of the financial year 2025-26 (Q4FY26). The report stated ‘Data for Q4FY26 indicates early signs of recovery in the sector. After seven quarters of portfolio contraction, this quarter witnessed a QoQ uptick of over 3 per cent.’ As on March 31, 2026, the industry portfolio stood at Rs 3,25,174 crore.

According to the report, the portfolio expansion was supported by quarterly disbursement of Rs 77,524 crore, the highest level seen in the past seven quarters, though still below the peak achieved in Q4FY24. Alok Misra, chief executive officer and director of MFIN, said ‘We can now say that despite the tough two years, industry is turning the corner as evidenced by uptick in portfolio and continued improvement in Portfolio At Risk.’ Further, the report said that the improvement in growth was mirrored by an improvement in asset quality. Despite seven quarters of contraction, the credit quality has returned to pre March 2024 levels.

Besides, the report stated, funding conditions also improved in FY26. NBFC-MFIs received total debt funding of Rs 77,867 crore during FY26, an increase of 30.9 per cent as compared with FY25. It mentioned ‘During FY 25-26 Banks contributed 77.4 per cent of the borrowings received, 12.2 per cent from Non-Bank entities, 4.6 per cent from ECB, 3.9 per cent from others and 1.9 per cent from AIFIs.’


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