Bharat Microfinance Report 2025

Indian Microfinance: Resilience, Responsibility & Inclusion

The State of Microcredit: A Panoramic View of the Microfinance Sector

2.1 Sector Overview clickhere

2.1.1 Key Performance Highlights

2.2 Loan Accounts clickhere

2.3 Loan Outstanding Analysis clickhere

2.4 Asset Quality and Delinquency Overview clickhere

2.5 Disbursement Overview clickhere

Mapping Microfinance Expansion Across India

3.3 Client Outreach of MLIs clickhere

3.4 Loan Outstanding clickhere

3.5 Distribution of Loans by Purpose clickhere

3.6 Going Beyond Credit: Credit-Plus Activities of MLIs clickhere

3.7 Conclusion clickhere

Performance of NBFC-MFIs in Microfinance

Operational Eminence of Micro Lending Institutions

4.1 Productivity of Workforce clickhere

4.2 Asset Quality in MLIs

4.3 Income and Expenditure Analysis clickhere

4.4 Self-Sustainability and Profitability clickhere

4.5 Balance Sheet and Capital Structure clickhere

SHG-Bank Linkage Programme: Moving from Financial Inclusion to overall wellbeing

5.3 SHG-BLP Activity since Inception clickhere

5.4 Joint Liability Group Financing: Complementing the SHG-Bank Linkage Channel

5.5 SHG Graduation to Enterprises clickhere

Financial Inclusion and Business Correspondent Model

Geographical Spread

Select & View Tables

Chapter 2 Section 2.3Loan Outstanding Analysis

The sector’s loan outstanding contracted from ₹3,74,006 Cr. in March 2025 to ₹3,33,907 Cr. in March 2026, a decline of 11%.

Loan Outstanding (in ₹ Cr.) across micro-lenders

Market Share of micro-lenders in terms of Loan Outstanding (in %)

Regional distribution of loan outstanding (in %)

2.3 Loan Outstanding Analysis

2.3.1 Loan Outstanding (in ₹ Cr.)

Figure 2.3: Loan Outstanding (in ₹ Cr.) across micro-lenders

The sector’s loan outstanding contracted from ₹3,74,006 Cr. in March 2025 to ₹3,33,907 Cr. in March 2026, reflecting a decline of 11%. Every lender category except Other lenders recorded a year-on-year decline in loan outstanding, though the magnitude of decline varied sharply: Banks contracted by (-29%), the steepest among all categories, followed by SFBs at (-13%), while NBFC-MFIs and NBFCs contracted by only (-1%) and (-0.1%), respectively. One of the probable reasons for the decline in loan outstanding is the imposition of stricter guardrails by the SRO’s in response to overleveraging, which caused the micro-lenders to tighten eligibility and reduce disbursements, thereby shrinking the overall loan outstanding. The second reason is due to the lack of adequate funding support, which was addressed to some extent towards the end of the year, and may not have been reflected in the performance of FY 2025-26. The Government of India (GOI) introduced a guarantee scheme called Credit Guarantee Scheme for MFI 2.0 (CGSMFI 2.0), similar to the one introduced during COVID-19, with a higher corpus of ₹20,000 crore and a separate quota for small, medium and other MFIs.

Box 2.1: CGSMFI-2.0: Strengthening Credit Flow to Microfinance Institutions

Access to institutional funding remains critical for Microfinance Institutions (MFIs), particularly small and medium-sized institutions. During periods of funding constraints, Sa-Dhan, as an industry association and RBI-recognised SRO, consistently engaged with policymakers, banks, financial institutions and other stakeholders to highlight challenges in accessing bank finance, articulate the sector’s funding needs, and promote a conducive funding and regulatory environment to strengthen lender confidence and improve credit flow. Sa-Dhan also strongly recommended a dedicated allocation within the guarantee mechanism for small and medium-sized MFIs, ensuring that institutions facing greater challenges in accessing institutional and collateral-based credit can adequately benefit from the guarantee.

These efforts helped build a stronger case for a risk-sharing mechanism for lending to MFIs. The Government of India subsequently introduced CGSMFI-2.0 on 20 March 2026, with the objective of providing guarantee cover to eligible lending institutions for finance extended to NBFC-MFIs and MFIs for on-lending to small borrowers. The scheme envisaged facilitating credit flow of up to ₹20,000 crore to the sector.

Under the scheme, the guarantee coverage varies according to the size of the NBFC-MFI/MFI. Small institutions with AUM below ₹500 crore receive 80% guarantee cover, medium institutions with AUM of ₹500 crore to below ₹2,000 crore receive 75%, and large institutions with AUM of ₹2,000 crore and above receive 70%. The financial assistance is subject to an overall ceiling of 20% of the institution’s AUM. Following the June 2026 revision, the maximum loan amount for large NBFC-MFIs/MFIs was increased from ₹300 crore to ₹1,000 crore.

The scheme also provides for an interest-rate cap. Loans from MLIs to NBFC-MFIs/MFIs are capped at one-year MCLR or EBLR plus 2% per annum. For onward lending to small borrowers, the interest rate is capped at 1% below the institution’s average lending rate during the preceding six months. The guarantee fee is 0.50% per annum, calculated on the sanctioned amount during the first year and on the outstanding amount thereafter.

An important feature of CGSMFI-2.0 is its focus on improving access to funding for smaller and mid-sized MFIs. The scheme requires MLIs to allocate at least 5% of the total sanctioned amount to small NBFC-MFIs/MFIs with AUM below ₹500 crore and at least 10% to medium-sized institutions with AUM between ₹500 crore and ₹2,000 crore. This provision is intended to broaden the reach of the guarantee facility beyond the larger institutions.

As of 10 June 2026, loans aggregating ₹770 crore had been sanctioned under the scheme. The Government subsequently extended the validity of CGSMFI-2.0 up to 31 August 2026, or until guarantees amounting to ₹20,000 crore were issued, whichever was earlier.

CGSMFI-2.0 thus provides a risk-sharing mechanism between lenders and the guarantee framework, with the potential to improve liquidity and diversify funding sources for MFIs, particularly smaller and mid-sized institutions. Its effectiveness will depend on the extent to which eligible institutions are able to access the facility and translate the additional funding into responsible and sustainable lending to small borrowers.

2.3.2 State/UT-wise Loan Outstanding (in ₹ Cr.)

Table 2.4 outlines the loan outstanding across States and Union Territories. Year-on-Year analysis reveals that 30 States/UTs experienced a decline in loan outstanding, while only 6 States with relatively smaller microfinance exposure—Arunachal Pradesh (33%), Meghalaya (18%), Mizoram (14%), Nagaland (13%), Punjab (7%), and Assam (5%) registered positive Y-o-Y growth.

Table 2.4 Loan Outstanding (in ₹ Cr.) of all micro-lenders across States/UTs - March 2026 and March 2025 (in descending order of Loan Outstanding)

Sl. No.	State/UT	March 2026 (in ₹ Cr.)	March 2025 (in ₹ Cr.)	Y-o-Y Growth (in %)
1	Bihar	53,010	57,206	-7%
2	Tamil Nadu	41,004	45,866	-11%
3	Uttar Pradesh	39,680	41,305	-4%
4	Karnataka	29,429	34,928	-16%
5	West Bengal	28,054	35,950	-22%
6	Maharashtra	24,845	28,390	-12%
7	Madhya Pradesh	19,824	21,444	-8%
8	Odisha	17,387	20,139	-14%
9	Rajasthan	13,799	15,611	-12%
10	Jharkhand	10,911	11,176	-2%
11	Gujarat	9,120	10,661	-14%
12	Keralam	8,824	11,234	-21%
13	Assam	6,874	6,517	5%
14	Chhattisgarh	5,750	6,429	-11%
15	Andhra Pradesh	5,577	5,660	-1%
16	Punjab	5,183	4,846	7%
17	Haryana	4,926	5,285	-7%
18	Telangana	4,325	4,785	-10%
19	Tripura	1,465	2,093	-30%
20	Uttarakhand	1,378	1,692	-19%
21	Puducherry	941	973	-3%
22	Delhi	498	590	-16%
23	Himachal Pradesh	179	184	-2%
24	Meghalaya	165	140	18%
25	Arunachal Pradesh	134	101	33%
26	Mizoram	123	108	14%
27	Goa	99	149	-33%
28	Others	93	142	-35%
29	Jammu & Kashmir	78	93	-16%
30	Sikkim	70	119	-41%
31	Nagaland	67	59	13%
32	Manipur	41	75	-45%
33	Chandigarh	32	34	-5%
34	Andaman & Nicobar Islands	17	17	-3%
35	Dadra and Nagar Haveli and Daman and Diu	5	6	-15%
36	Lakshadweep	0.004	0.010	-59%
37	Ladakh	0.000	0.003	-100%
	Sector	3,33,907	3,74,006	-11%

Bihar retained its position as the largest microfinance market in the country, accounting for 16% of the sector’s loan outstanding, followed by Tamil Nadu and Uttar Pradesh at 12% each. Together, the top 5 states, Bihar, Tamil Nadu, Uttar Pradesh, Karnataka and West Bengal, account for 57% of the sector’s loan outstanding, indicating that microfinance credit exposure remains geographically concentrated within a few key states.

Notably, the principal key states with the highest loan outstanding, including West Bengal (-22%), Karnataka (-16%), Tamil Nadu (-11%), Bihar (-7%), and Uttar Pradesh (-4%), etc., saw a contraction in the loan outstanding, reflecting broad-based negative growth in these key states.

Figure 2.4: Market Share (in %) of micro-lenders in terms of Loan Outstanding (in ₹ Cr.)

In terms of market share of loan outstanding, NBFC-MFIs remain the dominant provider of microcredit, accounting for 42% of the total market. Banks held the second-largest share with 26%, followed by Small Finance Banks (SFBs) at 15%, NBFCs at 14%, and Others comprising the remaining 3%.

2.3.3 State/UT-wise Loan Outstanding per Unique Active Borrower (in ₹)

Table 2.5 provides data on loan outstanding per unique active borrower across States and Union Territories, showing modest year-on-year growth of 3%. This marginal increase is mainly attributable to a more cautious and risk-limiting stance adopted by micro-lenders in response to rising delinquencies and increased borrower leverage. Additional contributing factors include limiting measures imposed by the SROs, such as restrictions on the number of micro-lenders and caps on combined microfinance and retail loan exposure for households, which is not to exceed ₹2 lakhs.

Table 2.5 Loan Outstanding per Unique Active Borrower across States/UTs (in ₹) - March 2026 and March 2025 (in descending order of Loan Outstanding per Unique Active Borrower)

Sl. No.	State/UT	March 2026 (in ₹)	March 2025 (in ₹)	Y-o-Y Growth (in %)
1	Bihar	59,070	50,049	18%
2	Arunachal Pradesh	58,161	42,010	38%
3	Karnataka	55,483	54,686	1%
4	Jharkhand	53,969	46,609	16%
5	Puducherry	52,983	52,722	0.5%
6	Tamil Nadu	51,537	59,191	-13%
7	Himachal Pradesh	50,680	44,882	13%
8	Keralam	50,591	52,543	-4%
9	Uttar Pradesh	50,225	44,408	13%
10	Maharashtra	49,119	46,260	6%
11	Odisha	49,117	48,300	2%
12	Haryana	48,792	46,063	6%
13	Punjab	48,329	44,303	9%
14	West Bengal	47,752	48,479	-1%
15	Rajasthan	47,273	46,661	1%
16	Andaman & Nicobar Islands	46,517	41,096	13%
17	Madhya Pradesh	46,338	45,067	3%
18	Chhattisgarh	46,005	45,639	1%
19	Uttarakhand	45,025	44,380	1%
20	Goa	44,591	42,777	4%
21	Dadra and Nagar Haveli and Daman and Diu	44,042	36,710	20%
22	Tripura	43,617	49,396	-12%
23	Jammu & Kashmir	43,276	45,440	-5%
24	Gujarat	42,844	42,192	2%
25	Mizoram	40,527	28,509	42%
26	Delhi	39,984	39,747	1%
27	Nagaland	39,358	37,466	5%
28	Meghalaya	38,967	32,112	21%
29	Assam	38,682	39,834	-3%
30	Chandigarh	38,427	37,020	4%
31	Sikkim	33,939	39,311	-14%
32	Telangana	33,900	37,690	-10%
33	Andhra Pradesh	30,492	30,588	-0.3%
34	Lakshadweep	19,967	19,344	3%
35	Manipur	18,877	24,936	-24%
36	Others	6,611	28,766	-77%
37	Ladakh	N.A.	6,332	N.A.
	Sector	49,658	48,171	3%

On a Y-o-Y comparison, 10 States/UTs recorded a decline in loan outstanding per borrower, while 25 States/UTs registered positive growth in loan outstanding per borrower. The principal key states with substantial loan outstanding, such as Bihar (18%), Uttar Pradesh (13%), Maharashtra (6%), Madhya Pradesh (3%), Odisha (2%), Karnataka (1%), Rajasthan (1%), etc., registered growth in loan outstanding per borrower, while Tamil Nadu (-13%) and West Bengal (-1%) registered a decline in loan outstanding per borrower.

Figure 2.5: Percentage of Rural, Urban and Semi-Urban Share of Micro-Lenders Loan Outstanding

As illustrated in Figure 2.5, the loan outstanding geographical composition continues to exhibit a pronounced rural orientation. During FY 2025-26, the rural segment accounted for 80% of the aggregate loan outstanding, with the urban and semi-urban segments contributing 18% and 2%, respectively. This distribution is broadly consistent with the pattern observed in FY 2024-25, when the rural segment constituted 79% of the aggregate loan outstanding, while the urban and semi-urban segments accounted for 19% and 2%, respectively — reflecting a marginal but noteworthy 1 percentage-point shift toward rural concentration year-on-year. This sustained and deepening skew toward rural geographies across both financial years reaffirms that microfinance, in its essential nature, remains fundamentally a rural phenomenon, being oriented toward addressing the credit needs of underserved and financially excluded rural populations who typically fall outside the ambit of conventional banking channels.

Figure 2.6: Regional distribution of Loan Outstanding (in %)

In terms of regional distribution of loan outstanding, the Eastern region—comprising Bihar, Odisha, Jharkhand, West Bengal, and Andaman & Nicobar Islands—led with a 33% market share. This was followed by the Southern region, which includes Andhra Pradesh, Karnataka, Keralam, Tamil Nadu, Telangana, Puducherry, and Lakshadweep, accounting for 27%. The Central region, consisting of Madhya Pradesh, Uttar Pradesh, Chhattisgarh, and Uttarakhand, held 20% of the market share. The Western region, covering Gujarat, Maharashtra, Goa, and Dadra and Nagar Haveli and Daman and Diu, contributed 10%, while the Northern region—encompassing Delhi, Haryana, Rajasthan, Punjab, Chandigarh, Himachal Pradesh, Jammu & Kashmir, and Ladakh—accounted for 7%. The Northeastern states, including Assam, Manipur, Tripura, Nagaland, Sikkim, Meghalaya, Mizoram, and Arunachal Pradesh, have the smallest share at 3%.

2.3.4 State/UT-wise Average Balance per Loan Account (in ₹)

The State and Union Territory-wise average balance per loan account is detailed in Table 2.6. As of March 31, 2026, the overall average balance per loan account in the microfinance sector stood at ₹32,116, reflecting a year-on-year growth of 13% from ₹28,385 as on March 31, 2025.

Table 2.6: Average Balance per Loan Account (in ₹) - March 2026 and March 2025 (in descending order of Average Balance per Loan Account)

Sl. No.	State/UT	March 2026 (in ₹)	March 2025 (in ₹)	Y-o-Y Growth (in %)
1	Andaman & Nicobar Islands	43,249	37,626	15%
2	Arunachal Pradesh	38,104	30,590	25%
3	Puducherry	37,908	31,184	22%
4	Tamil Nadu	36,243	31,410	15%
5	Himachal Pradesh	35,567	31,895	12%
6	Bihar	34,317	28,950	19%
7	Delhi	33,883	31,109	9%
8	Dadra and Nagar Haveli and Daman and Diu	33,792	28,735	18%
9	Mizoram	33,628	26,417	27%
10	Haryana	33,457	29,066	15%
11	Karnataka	33,272	28,396	17%
12	Uttar Pradesh	32,886	28,438	16%
13	Rajasthan	32,196	28,451	13%
14	Meghalaya	31,744	27,055	17%
15	Gujarat	31,718	27,760	14%
16	Tripura	31,386	32,036	-2%
17	West Bengal	31,293	30,411	3%
18	Nagaland	31,258	32,628	-4%
19	Madhya Pradesh	31,172	27,653	13%
20	Uttarakhand	31,110	27,988	11%
21	Assam	31,085	26,933	15%
22	Jharkhand	31,009	26,862	15%
23	Chhattisgarh	30,673	27,193	13%
24	Punjab	30,580	25,743	19%
25	Maharashtra	30,124	27,010	12%
26	Keralam	29,977	27,886	7%
27	Sikkim	29,549	33,185	-11%
28	Jammu & Kashmir	28,954	30,062	-4%
29	Goa	28,750	26,108	10%
30	Odisha	28,203	24,957	13%
31	Chandigarh	26,634	25,368	5%
32	Telangana	25,740	27,408	-6%
33	Andhra Pradesh	24,993	22,903	9%
34	Manipur	18,267	22,701	-20%
35	Lakshadweep	9,983	16,120	-38%
36	Others	6,358	22,578	-72%
37	Ladakh	N.A.	6,332	N.A.
	Sector	32,116	28,385	13%

On a Y-o-Y comparison, 7 States and UTs, viz. Lakshadweep (-38%), Manipur (-20%), Sikkim (-11%), Telangana (-6%), Nagaland and Jammu & Kashmir (-4% each) and Tripura (-2%) experienced a decrease in average balance per loan account. The principal key states with substantial loan outstanding, such as Bihar (19%), Karnataka (17%), Uttar Pradesh (16%), Tamil Nadu and Jharkhand (15% each), Madhya Pradesh, Rajasthan, and Odisha (13% each), and Maharashtra (12%), etc., registered positive Y-o-Y growth in average balance per loan account.

2.3.5 Top States and Districts in terms of Loan Outstanding

The top 10 States and top 25 districts in terms of total loan outstanding at the end of FY 2025-26 are given in Table 2.7 and Table 2.8, respectively. Bihar continues to be the top state in terms of loan outstanding, accounting for 16% of the sector’s loan outstanding, and the top 5 states account for nearly 57% of the sector’s loan outstanding.

Table 2.7: Top 10 States in terms of Loan Outstanding (in ₹ Cr.)

Microfinance Sector – all micro-lenders
Sl. No.	State	Loan Outstanding (in ₹ Cr.)
1	Bihar	53,010
2	Tamil Nadu	41,004
3	Uttar Pradesh	39,680
4	Karnataka	29,429
5	West Bengal	28,054
6	Maharashtra	24,845
7	Madhya Pradesh	19,824
8	Odisha	17,387
9	Rajasthan	13,799
10	Jharkhand	10,911

The top 10 states accounted for 83% of the share in the sector loan outstanding, while the top 5 states alone accounted for 57% of the sector loan outstanding.

Similarly, the loan outstanding of the top 25 districts in the country is mapped and given below. This data is the cumulative outstanding of all the micro-lenders as of 31st March 2026 in these 25 districts.

Table 2.8 Top 25 Districts in terms of Loan Outstanding (in ₹ Cr.)

Microfinance Sector – all micro-lenders
Sl. No.	State	District	Loan Outstanding (in ₹ Cr.)
1	Bihar	Purbi Champaran	4,004
2	Bihar	Muzaffarpur	3,624
3	West Bengal	Murshidabad	3,368
4	Bihar	Samastipur	3,199
5	Bihar	Darbhanga	2,946
6	Bihar	Paschim Champaran	2,770
7	Bihar	Madhubani	2,656
8	Tamil Nadu	Cuddalore	2,570
9	Karnataka	Belagavi	2,395
10	West Bengal	North 24 Parganas	2,386
11	Uttar Pradesh	Gorakhpur	2,245
12	Tamil Nadu	Thanjavur	2,214
13	Bihar	Araria	2,174
14	Karnataka	Mysuru	2,083
15	Bihar	Begusarai	2,004
16	West Bengal	South 24 Parganas	1,937
17	Tamil Nadu	Madurai	1,906
18	Karnataka	Bengaluru Urban	1,897
19	Tamil Nadu	Salem	1,856
20	Bihar	Vaishali	1,823
21	Bihar	Gaya	1,786
22	Karnataka	Tumakuru	1,745
23	Bihar	Sitamarhi	1,734
24	Bihar	Katihar	1,716
25	West Bengal	Hooghly	1,715

The top 25 districts by loan outstanding included 12 districts from Bihar, 4 districts each from Karnataka, Tamil Nadu, and West Bengal, and 1 district from Uttar Pradesh. The top 15 districts had loan outstanding exceeding ₹2,000 Cr., while Purbi Champaran district of Bihar recorded the highest loan outstanding, exceeding ₹4,000 Cr. The combined loan outstanding of the top 25 districts accounted for 18% of the sector loan outstanding, while the top 10 districts alone contributed 9%. A notable decline was observed in the number of districts with loan outstanding greater than ₹2,000 Cr., falling from 24 as of 31 March, 2025, to 15 as of 31 March, 2026.

2.3.6 District-wise Loan Outstanding

Figure 2.7: Geographic Distribution of Microfinance Loan Outstanding across Districts (as of March 2026)

Table 2.9 District Distribution by Loan Outstanding Category

Loan Outstanding Category	No. of Districts
<₹100 Cr.	216
₹100 Cr. - ₹500 Cr.	334
₹500 Cr. - ₹2,000 Cr.	215
>₹2,000 Cr.	15

According to data from Equifax India, micro-lenders operate across nearly 780 districts in 28 States and 7 Union Territories. Among these, 15 districts have loan outstanding exceeding ₹2,000 Cr. This group includes 8 districts in Bihar, 2 districts each in Karnataka, Tamil Nadu and West Bengal, and 1 district in Uttar Pradesh. A further breakdown reveals that 11 districts have loan outstanding above ₹2,000 Cr. but less than ₹3,000 Cr., 3 districts have loan outstanding exceeding ₹3,000 Cr. but less than ₹4,000 Cr., and only 1 district (Purbi Champaran of Bihar) recorded loan outstanding above ₹4,000 Cr.

The number of districts with GLP above ₹2,000 Cr. declined from 24 in FY 2024-25 to 15 in FY 2025-26. Loan outstanding between ₹500 Cr. and ₹2,000 Cr. was reported in 215 districts, primarily from states such as Bihar, Tamil Nadu, Uttar Pradesh, West Bengal, Karnataka, Madhya Pradesh, Odisha, Jharkhand, Rajasthan, and Maharashtra. Additionally, 334 districts recorded loan outstanding in the range of ₹100 Cr.–₹500 Cr., while another 216 districts have loan outstanding below ₹100 Cr.

2.3.7 Aspirational Districts – Loan Outstanding

Aspirational Districts⁴ are the 112 districts identified by NITI Aayog in January 2018 to boost human development outcomes across health and nutrition, education, agriculture and water resources, financial inclusion, skill development, and basic infrastructure, and they remain a closely watched segment within India’s microfinance sector as of March 2026.

Table 2.10 Loan Outstanding Amount (in ₹ Cr.) in Aspirational Districts by Micro Lender Type (March 2026 and March 2025)

Micro Lender	March 2026	March 2025	Micro Lender Share (in %)	Y-o-Y Growth (in %)
NBFC-MFIs	23,192	22,605	46%	3%
Banks	13,446	18,164	26%	-26%
NBFCs	6,496	6,111	13%	6%
SFBs	6,370	7,183	13%	-11%
Others	1,235	661	2%	87%
Overall	50,739	54,724		-7%

As of March 2026, the loan outstanding across aspirational districts stood at ₹50,739 crore, accounting for 15% of the total microfinance sector portfolio. On a year-on-year basis, the portfolio contracted by 7% from ₹54,724 crore in March 2025, demonstrating greater resilience than the broader sector, which registered a decline of 11% over the same period. Also, channelling ₹50,739 Cr. (15% of the sector loan outstanding) into 112 Aspirational Districts directly supports targeted poverty alleviation and bridges regional credit disparities.

Figure 2.8: Share of Microfinance Loan Outstanding across Aspirational Districts by Micro-Lender Type (as of March 2026)

Among the micro-lenders, NBFC-MFIs have the maximum share of loan outstanding of 46% in the aspirational districts, followed by Banks at 26%, SFBs and NBFCs at 13% each and Others (2%), respectively.

⁴ https://www.niti.gov.in/sites/default/files/2022-09/List-of-Aspirational-Districts.pdf

List of Abbreviations

#	Abbreviation	Full Form
1	AA	Account Aggregator
2	ABCO	Average Borrower per Credit Officer
3	ABS	Active Borrowers per staff
4	AI	Artificial Intelligence
5	API	Application Programming Interface
6	APY	Atal Pension Yojana
7	AS	Accounting Standards
8	ATS	Average Ticket Size
9	AUM	Assets Under Management
10	BC	Business Correspondent
11	BF	Business Facilitators
12	BSBDA	Basic Savings Bank Deposit Account
13	CA	Chartered Accountant
14	CAGR	Compounded Annual Growth Rate
15	CAR	Capital Adequacy Ratio
16	ChatGPT	Chat Generative Pre-trained Transformer
17	CICs	Credit Information Companies
18	CLA	Co-Lending Arrangement
19	CLM	Co-Lending Model
20	CMI	Credit Market Indicator
21	CRPs	Community Resource Persons
22	CSA	Climate Smart Agriculture
23	CSR	Corporate Social Responsibility
24	D/E	Debt/Equity
25	DAY NRLM	Deendayal Antyodaya Yojana-National Rural Livelihood Mission
26	DAY NULM	Deendayal Antyodaya Yojana-National Urban Livelihoods Mission
27	DAY-NRLM	National Rural Livelihood Mission
28	DUGJY	Deen Dayal Upadhyaya Gram Jyoti Yojana
29	DEA	Depositor Education and Awareness
30	DoP	Department of Post
31	DPD	Days Past Due
32	ECB	External Commercial Borrowings
33	ECL	Expected Credit Loss
34	EDP	Enterprise Development Programmes
35	EIP	European Investment Plan
36	eKYC	Electronic Know Your Customer
37	EMI	Equated Monthly Instalment
38	ESG	Environmental, Social, and Governance
39	EV	Electric Vehicle
40	FACE	Fintech Association for Consumer Empowerment
41	FIs	Financial Institutions
42	FPOs	Farmer Producer Organizations
43	FSI	Financial Services Industry
44	FSSAI	Food Safety and Standards Authority of India
45	FY	Financial Year
46	GCC	General Credit Card
47	GDP	Gross Domestic Product
48	GJ	Gigajoules
49	GPFI	Global Partnership for Financial Inclusion
50	GRIP	Graduated Rural Income Generation Project
51	GST	Goods and Services Tax
52	HR	Human Resource
53	ICT	Information and Communication Technology
54	ID	Identity Document
55	IMF	International Monetary Fund
56	IRDAI	Insurance Regulatory and Development Authority of India
57	IVR	Interactive Voice Response
58	JEE	Joint Entrance Examination
59	JLG	Joint Liability Group
60	JLGPls	Joint Liability Groups Promoting Institutions
61	KCC	Kisan Credit Card
62	KFS	Key Facts Statement
63	KYC	Know Your Customer
64	LEDP	Livelihood and Enterprise Development Programme
65	LSPs	Loan Service Providers
66	MACS	Mutually Aided Cooperative Societies
67	MEDP	Micro Enterprise Development Programme
68	MGNREGA	Mahatma Gandhi National Rural Employment Guarantee Act
69	MLIs	Micro Lending Institutions
70	MMU	Mobile Medical Unit
71	MoRD	Ministry of Rural Development
72	MoSPI	Ministry of Statistics and Programme Implementation
73	MoU	Memorandum of Understanding
74	MSME	Micro, Small, and Medium Enterprises
75	MUDRA	Micro Units Development & Refinance Agency Ltd.
76	NABARD	National Bank for Agriculture and Rural Development
77	NBFCs	Non-Banking Financial Companies
78	NCD	Non-Convertible Debentures
79	NCDs	Non-Communicable Diseases
80	NDA	National Defence Academy
81	NEET	National Eligibility cum Entrance Test
82	NFHS	National Family Health Survey
83	NFP	Not-for-Profit
84	NGO	Non-Governmental Organizations
85	NOF	Net Owned Fund
86	NPA	Non-Performing Asset
87	NPS	National Pension System
88	NRHM	National Rural Health Mission
89	NRLM	National Rural Livelihood Mission
90	NSSO	National Sample Survey Office
91	OCEN	Open Credit Enablement Network
92	OD	Overdraft
93	OED	—
94	OECD	Organisation for Economic Co-operation and Development
94	ONDC	Open Network for Digital Commerce
95	OPEC	Organization of the Petroleum Exporting Countries
96	OSS	Operational Self Sufficiency
97	PACS	Primary Agricultural Cooperative Societies
98	PAN	Permanent Account Number
99	PAR	Portfolio at Risk
100	PFRDA	Pension Fund Regulatory and Development Authority
101	PIB	Press Information Bureau
102	PLFS	Periodic Labour Force Survey
103	PMFBY	Pradhan Mantri Fasal Bima Yojana
104	PMJAY	Pradhan Mantri Jan Arogya Yojana
105	PMJDY	Pradhan Mantri Jan Dhan Yojana
106	PMJJBY	Pradhan Mantri Jeevan Jyoti Bima Yojana
107	PMMY	Pradhan Mantri Mudra Yojana
108	PMSBY	Pradhan Mantri Suraksha Bima Yojana
109	POs	Producer Organizations
110	PSBs	Public Sector Banks
111	QoQ	Quarter on Quarter
112	QR	Quick Response
113	RBI	Reserve Bank of India
114	RCBs	Rural Cooperative Banks
115	RE	Regulated Entity
116	ROA	Return on Assets
117	ROE	Return on Equity
118	RRBs	Regional Rural Banks
119	SC/ST	Scheduled Castes/Scheduled Tribes
120	SDGs	Sustainable Development Goals
121	SFB	Small Finance Bank
122	SGSY	Swarnajayanti Gram Swarozgar Yojana
123	SHG	Self-Help Group
124	SHG-BLP	Self-Help Group Bank Linkage Programme
125	SHPIs	Self Help Group Promoting Institutions
126	SIDBI	Small Industries Development Bank of India
127	SME	Small and Medium-sized Enterprises
128	SRLM	State Rural Livelihoods Mission
129	SROs	Self-Regulatory Organizations
130	TLE	Transfer of Loan Exposures
131	UI	User Interface
132	ULI	Unified Lending Interface
133	UPI	Unified Payments Interface
134	US	United States
135	UTs	Union Territories
136	WASH	Water, Sanitation, and Hygiene
137	WEAF	Women Enterprise Acceleration Fund
138	WE-LEAD	Women Entrepreneurship Livelihood Enhancement and Development
139	YEP	Youth Entrepreneurship Program
140	YoY	Year on Year

Glossary

ABCO

ABCO is an acronym for Active Borrower per Credit Officer. It is a key operational metric in microfinance that measures the client-to- credit officer ratio, indicating the average number of active borrowers managed by each credit officer. It is also commonly referred to as the Case Load. This will also indicate the efficiency of operation, which can impact the operational expenses

Active Borrowers

The individuals whose loan accounts are current have an outstanding loan balance with the MFI, and are under repayment obligation. Individuals who have multiple loans with an MFI should be counted as a single borrower.

Assets Under Management (AUM)

Assets Under Management (AUM) refers to the total value of client loan portfolios that an institution actively manages, including both on- book and off-balance sheet (off-BS) portfolios. This includes all outstanding principal from current, delinquent, and renegotiated loans, but excludes loans that have been written off, on the own book, as well as those securitized or direct assignment assets resting on the securitization partners. AUM reflects the overall scale of financial assets the institution is responsible for, regardless of ownership.

Average Loan Size

Average Loan size represents the client-per- capita loan amount. It is calculated as the Loan portfolio divided by the number of clients of an MFI. It is a key indicator used to assess the scale and depth of credit outreach.

Average Ticket Size (ATS)

Average Ticket Size (ATS) refers to the average loan amount disbursed per loan during a specific period of time. This metric is typically calculated for a defined time period such as monthly, quarterly, or annually, depending on the reporting or analysis needs. It is calculated as the Total Loan Amount Disbursed divided by the Total Number of Loans Disbursed.

Borrowing Cost

The cost of borrowing refers to the total charge incurred for taking a debt obligation, which includes interest payments as well as any additional financial fees (such as processing fees, service charges, insurance premiums, or administrative costs). A percentage of such cost over the total amount borrowed indicates the rate of such cost.

Capital Adequacy Ratio

Capital Adequacy is a key financial indicator used to measure the solvency and risk-bearing capacity of Microfinance Institutions (MFIs). It reflects the institution’s ability to absorb potential losses and protect depositors and creditors. It is the proportion of the equity capital and free reserves or own funds held by an MFI against its total risk-weighted assets. A higher Capital Adequacy Ratio indicates stronger financial health and a greater ability to withstand credit or operational shocks. A minimum requirement of an NBFC-MFI is 15%.

Capital to Total Assets

The Capital to Total Assets ratio is a measure of an institution’s financial strength and stability. It indicates the proportion of an institution’s own capital (or net worth) relative to its total assets.

Co-lending

Co-lending is a financial arrangement in which two or more regulated entities join hands to extend a loan, by taking a fixed share by each entity. It will reflect on the books of all the partnering institutions. Typically, a bank and a non-bank financial institution (NBFC or NBFC-MFI) or HFC can join together to extend credit to a borrower and a prefixed ratio at a weighted average interest rate. The partnership combines the strengths of both entities.

Debt-Equity Ratio

The Debt-Equity Ratio is a key financial metric that indicates the proportion of total debt to total equity held by an institution at a given point in time. It reflects the degree to which an organization is financing its operations through borrowed funds versus own funds or free capital. It also indicates the leverage of capital of an entity

Debt Funding

Debt Funding refers to the portion of a financial institution’s loan portfolio that is financed through external borrowings, rather than from internal accruals or equity capital. It reflects the extent to which an institution relies on borrowed funds, such as loans from banks, financial institutions, or capital markets, to support its lending activities.

External Cost

External Cost refers to the finance cost incurred by Microfinance Institutions (MFIs) on the borrowed funds from external sources, primarily banks and financial institutions. This cost is largely determined by the prevailing lending rates of banks, and as such, it is beyond the direct control of MFIs.

Finance Cost

Finance Cost refers to the actual interest and other financial expenses incurred by a Microfinance Institution (MFI) on the average borrowed funds that remain outstanding during a given period. This metric is crucial for evaluating the cost-efficiency and funding strategy of MFIs, and plays a key role in determining their lending rates and financial sustainability.

Financial Inclusion

Financial Inclusion refers to the delivery of affordable, accessible, and appropriate financial services to disadvantaged and low-income segments of society who are traditionally excluded from the formal financial system. These services include savings, credit, insurance, remittances, pensions, banking services, etc.

Joint Liability Groups

Groups of 4 to 8 borrowers come together to borrow from a financial institution under a joint liability concept, as per which there is an inter se agreement between the members whereby each borrower is liable to repay the loan of each member of the group.

Margin

Margin refers to the difference between the total yield on the loan portfolio and the finance cost incurred to fund that portfolio. It represents the net earnings a Microfinance Institution (MFI) makes from its lending activities before operating expenses and provisions.

Managed Loan Portfolio

Managed Loan Portfolio refers to the loan assets originally originated by Microfinance Institutions (MFIs) but subsequently sold or assigned to a third party, such as a bank, to improve liquidity. Despite the sale, MFIs continue to manage these loans, including activities like collection of repayments and servicing the accounts on behalf of the purchasing institution. This arrangement helps MFIs free up capital while maintaining their relationship with borrowers and ensuring ongoing portfolio management.

Non-Performing Assets (NPA)

A Non-Performing Asset (NPA) is a debt obligation where the borrower has failed to honour repayment commitments, either interest, principal, or both, to the designated lender for a specified period, typically 90 days or more. As a result, the NPA ceases to generate income for the lender in the form of interest or principal repayments. NPAs represent credit risk and affect the financial health and asset quality of lending institutions.

On-book Portfolio (Net Loan Portfolio)

On-book Portfolio (Net Loan Portfolio) refers to the total outstanding principal of all active client loans recorded on the institution’s balance sheet. This includes current, delinquent, and renegotiated loans, but excludes loans that have been written off. Interest receivable is not included, except for Microfinance Institutions (MFIs) that report under Ind-AS, where such interest is recognized as part of the outstanding amount.

Operating Self Sufficiency (OSS)

Operating Self Sufficiency (OSS) measures the extent to which a Microfinance Institution’s (MFI’s) income from operations and investments is sufficient to cover its operating expenses, like operating costs, loan loss provisions, and finance costs (cost of borrowed funds) incurred for conducting the operations. An OSS ratio of 100% or above indicates that the MFI is generating enough income to sustain its operations without requiring subsidies or external support, reflecting financial viability and sustainability.

Outstanding Borrowings

Outstanding Borrowings refer to the total amount of funds that an entity has borrowed and has not yet repaid as of a specific reporting date. This includes all short-term and long- term debt obligations, such as loans, credit lines, bonds, and other forms of financing, net of any repayments made.

Portfolio Quality

Portfolio Quality refers to the level of credit risk present in a loan portfolio, indicating the likelihood of default by borrowers. A high- quality portfolio contains a lower amount of risk, characterized by timely repayments and minimal defaults. Maintaining good portfolio quality is crucial for the financial health and sustainability of lending institutions.

Portfolio at Risk (PAR)

Portfolio at Risk (PAR) indicates the proportion of outstanding amounts of all loan accounts having past due/arrears to the total outstanding loan. In general, PAR 30 refers to the percentage of the loan portfolio that remains unpaid 30 days or more beyond the due date, which would be used as a measure to assess the portfolio quality. Loans with dues overdue by 90 days or more (PAR 90) are generally classified as Non-Performing Assets (NPAs).

Qualifying Assets

Qualifying Assets are loan portfolios created by MFIs adhering to certain conditions as prescribed by RBI, to make the MFIs eligible to be called as MFIs and to raise loans from banks under the Priority Sector Advances Scheme (as per recent RBI norms). For an MFI, 60% of the total ass ets need to be under this category

Return on Assets (RoA)

Return on Assets (RoA) is the universally accepted profitability measure, which, in essence, is the percentage net income earned out of total average assets deployed by MFIs during a given period, typically one financial year. It is a widely used profitability metric that measures how efficiently an institution utilizes its total assets to generate net income.

Return on Equity (RoE)

Return on Equity (RoE) is a key profitability indicator that measures the net income earned by a Microfinance Institution (MFI) relative to its average equity during a given period, typically one financial year. RoE reflects how efficiently an MFI is using its own capital (equity) to generate profits.

Self Help Groups (SHGs)

SHGs refer to groups of 10-20 persons coming together to form an informal community-based institution to meet their common financial and social needs. Most of the SHGs are formed by women from a homogeneous background. SHGs collect regular savings from members and use them for internal lending, before accessing higher amounts from banks.

SHG Bank Linkage Programme (SBLP)

SHGs are linked to mainstream banks for keeping their surplus savings and also to obtain loans. The loan is often given as a multiplier of the total internal savings accrued in a group. It is considered to be an effective strategy to ensure financial inclusion for the unbanked poor people.

Surplus

Surplus refers to the excess of income over expenses. It is calculated as the difference between the yield (i.e., income earned from the loan portfolio) and the total cost (including finance cost, operating expenses, and provisions). It can also be referred to as net margin.

Yield on Portfolio

Yield represents total income from microcredit operation - interest income, processing fee/ service charge – earned out of the average loan portfolio outstanding for a specific period. It does not include investment income. It is a good proxy/surrogate for loan interest rates. It serves as a useful proxy for the effective loan interest rate charged to clients and is often used to assess the pricing structure and earning capacity of the loan portfolio.