Chapter 2 Section 2.4Asset Quality and Delinquency Overview

The sector-wide PAR 30-179 DPD improved to 2.34% in March 2026 from 6.63% a year earlier, though PAR 180+ DPD rose to 17.04%.

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2.4 Asset Quality and Delinquency Overview

2.4.1 Delinquency5 (in %)

This section depicts the delinquency in the microfinance sector during FY 2025-26, expressed in terms of Portfolio At Risk (PAR) for various buckets. The PAR 30-179 DPD improved significantly to 2.3%, from 6.6% in the last financial year. The delinquency under various buckets depicted in the table below indicates that PAR under all buckets have improved except for the PAR 180+ DPD bucket.

Table 2.11 Delinquency under various buckets for Sector as of March 2026 and March 2025
Micro-Lender March 2026 March 2025
PAR 30-179 DPD PAR 60-179 DPD PAR 90-179 DPD PAR 180+ DPD PAR 30-179 DPD PAR 60-179 DPD PAR 90-179 DPD PAR 180+ DPD
NBFC-MFIs 2.13% 1.75% 1.33% 10.44% 6.89% 5.51% 4.20% 7.82%
Banks 2.97% 2.45% 1.88% 23.66% 6.89% 5.53% 4.10% 12.69%
NBFCs 1.69% 1.27% 0.91% 5.16% 4.10% 2.89% 2.01% 3.68%
SFBs 2.46% 2.01% 1.54% 27.14% 7.46% 6.11% 4.54% 17.64%
Others 4.89% 4.02% 2.95% 57.34% 8.91% 6.34% 4.26% 22.75%
Sector 2.34% 1.91% 1.45% 17.04% 6.63% 5.27% 3.92% 10.67%

The portfolio dynamics between March 2026 and March 2025 reveal a clear structural split: rapid recovery in active repayment behaviour alongside an accumulation of legacy defaulted loans. Sector-wide short-to-medium-term stress has decreased, with PAR 30–179 DPD significantly improving from 6.63% to 2.34% and PAR 90–179 DPD falling to 1.45%. This sharp decline in early-stage slippages underscores the impact of stricter underwriting guardrails, tighter caps on borrower indebtedness, and overall disciplined post-stress originations across lenders.

However, this improved operational stability contrasts with an ageing loss book. Sector-wide hard non-performing assets (PAR 180+ DPD) expanded from 10.67% to 17.04%, driven by accumulation among Banks (23.66%) and Small Finance Banks (27.14%). On the other hand, Specialised NBFC-MFIs (10.44% PAR 180+ DPD) and NBFCs (5.16% PAR 180+ DPD) have managed legacy risk far better, highlighting the resilience of dedicated field-level group monitoring. The higher level of PAR 180+ DPD with Banks is due to their different policy. Moreover, NBFCs and NBFC-MFIs adopt a better recovery mechanism with close follow-up.

5 The delinquency figures presented here differ from those presented in Chapter 3A and Chapter 4.2 because MLIs data reported to the CICs include technical write-offs, whereas the MLIs data submitted to the SROs exclude technical write-offs.

State/UT wise data further corroborate this downward trend in delinquency across the sector. Detailed delinquency percentages by various buckets for each State and Union Territory are provided in Table 2.12.

Table 2.12: States/UTs-wise overall delinquency (in %) under different buckets as of March 2026 (in descending order of Loan Outstanding)
Sl. No. State/UT Loan Outstanding
(in ₹ Cr.)
PAR 30-179 DPD
(in %)
PAR 60-179 DPD
(in %)
PAR 90-179 DPD
(in %)
PAR 180+ DPD
(in %)
1 Bihar 53,010 2.23% 1.82% 1.40% 13.95%
2 Tamil Nadu 41,004 1.88% 1.54% 1.17% 18.62%
3 Uttar Pradesh 39,680 2.37% 1.92% 1.47% 14.17%
4 Karnataka 29,429 2.29% 1.88% 1.46% 19.91%
5 West Bengal 28,054 2.65% 2.04% 1.36% 11.85%
6 Maharashtra 24,845 2.60% 2.22% 1.76% 19.44%
7 Madhya Pradesh 19,824 2.88% 2.39% 1.87% 18.20%
8 Odisha 17,387 2.17% 1.87% 1.50% 23.47%
9 Rajasthan 13,799 2.84% 2.28% 1.67% 17.75%
10 Jharkhand 10,911 1.95% 1.63% 1.27% 18.13%
11 Gujarat 9,120 3.15% 2.53% 1.91% 17.93%
12 Keralam 8,824 1.72% 1.41% 0.94% 28.03%
13 Assam 6,874 0.66% 0.51% 0.37% 17.68%
14 Chhattisgarh 5,750 1.94% 1.61% 1.26% 16.85%
15 Andhra Pradesh 5,577 2.88% 2.35% 1.80% 12.99%
16 Punjab 5,183 1.51% 1.10% 0.80% 19.65%
17 Haryana 4,926 2.38% 1.91% 1.36% 15.16%
18 Telangana 4,325 5.43% 4.32% 3.32% 12.87%
19 Tripura 1,465 2.66% 2.18% 1.60% 13.04%
20 Uttarakhand 1,378 2.32% 1.88% 1.46% 14.98%
21 Puducherry 941 1.39% 1.16% 0.89% 14.54%
22 Delhi 498 2.15% 1.68% 1.24% 19.94%
23 Himachal Pradesh 179 1.08% 0.81% 0.57% 5.46%
24 Meghalaya 165 0.91% 0.64% 0.44% 7.23%
25 Arunachal Pradesh 134 2.09% 1.50% 0.89% 3.92%
26 Mizoram 123 0.64% 0.50% 0.33% 4.41%
27 Goa 99 1.68% 1.36% 0.99% 14.58%
28 Others 93 1.36% 1.08% 0.90% 45.87%
29 Jammu & Kashmir 78 2.06% 1.63% 1.20% 11.12%
30 Sikkim 70 3.33% 2.62% 1.80% 14.21%
31 Nagaland 67 0.54% 0.33% 0.22% 1.34%
32 Manipur 41 5.83% 4.33% 2.90% 52.37%
33 Chandigarh 32 2.63% 2.03% 1.52% 21.56%
34 Andaman & Nicobar Islands 17 0.13% 0.10% 0.07% 2.97%
35 Dadra and Nagar Haveli and Daman and Diu 5 1.32% 0.88% 0.66% 9.59%
36 Lakshadweep 0 0.00% 0.00% 0.00% 34.48%
37 Ladakh N.A. N.A. N.A. N.A. N.A.
Sector 3,33,907 2.34% 1.91% 1.45% 17.04%

Delinquency levels have improved across the sector. States with significant loan outstanding, such as Karnataka (2.29%), Bihar (2.23%), Odisha (2.17%), Tamil Nadu (1.88%), and Jharkhand (1.95%), reported below the sector PAR 30-179 DPD of 2.34%. In contrast, major states including Madhya Pradesh (2.88%), Rajasthan (2.84%), West Bengal (2.65%), Maharashtra (2.60%), and Uttar Pradesh (2.37%) exhibited PAR 30-179 DPD levels exceeding the sector’s average. The elevated PAR 180+ DPD values primarily reflect loans that have become Non-Performing Assets (NPAs) over a period of time, and continue to be reported as receivables in credit bureau records.

2.4.2 Aspirational Districts - Delinquency
Table 2.13 Delinquency (in %) in Aspirational Districts by Micro-Lender Type
Micro-Lender March 2026 March 2025
PAR 30-179 DPD (in %) PAR 90-179 DPD (in %) PAR 30-179 DPD (in %) PAR 90-179 DPD (in %)
NBFC-MFIs 2.06% 1.29% 7.49% 4.85%
Banks 2.91% 1.98% 7.24% 4.94%
NBFCs 1.33% 0.70% 3.60% 1.95%
SFBs 2.75% 1.81% 9.40% 6.29%
Others 4.69% 2.91% 9.86% 5.25%
Overall 2.26% 1.45% 7.19% 4.71%

As can be observed from the above table, in the aspirational districts, there is a sharp improvement in credit quality: the overall PAR 30-179 DPD in aspirational districts improved from 7.19% in March 2025 to 2.26% in March 2026, while PAR 90-179 DPD improved from 4.71% to 1.45% over the same period. Breaking this down by micro-lender type, NBFCs reported the lowest PAR 30-179 DPD among the micro-lenders in these districts at around 1.33%, while Others reported the highest delinquency near 4.69%. This improvement mirrors the broader sector-wide recovery in asset quality, where overall PAR 30-179 DPD improved from 6.63% in March 2025 to 2.34% in March 2026, partly attributable to write-offs by lenders.