Microfinance shows spark but shrinks to lowest in 3 years

February 12, 2026

The Indian microfinance market has shrunk to ₹3.22 lakh crore, marking a significant 16% year-on-year decline and reaching a three-year low. This contraction is attributed to a large bank reclassifying micro loans as retail and an acceleration in writing off bad loans, despite some lenders showing improved recovery and business normalization.

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