Chapter 3 - Section 3.3Client Outreach of MLIs

Microfinance serves the financial needs of low-income households that may face constraints in accessing formal credit from mainstream banking channels. MLIs provide loans to these households using delivery models designed to improve accessibility and convenience.

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Outreach of MLIs to Active Borrowers (in lakhs): Yearly Trend and Category–wise Breakup as of March 2026

Outreach to Borrowers (in lakhs): Category–wise Breakup as on March’26

Outreach to Borrowers (in lakhs): Size–wise Breakup as on March’26

3.3 Client3 Outreach of MLIs

Microfinance serves the financial needs of low-income households that may face constraints in accessing formal credit from mainstream banking channels. MLIs provide loans to these households using delivery models designed to improve accessibility and convenience.

The active client base of MLIs declined to 558 lakhs in FY 2025-26 from 627 lakhs in the previous year, representing a year-on-year decline of 11%. Excluding the client base of NBFCs and BC Companies, the Microfinance Institutions (MFI) category—comprising NBFC-MFIs, Societies, Sec.8 Coms, Trusts, MACS or Co-operatives—reported an active client base of 434 lakhs, with a year-on-year decline of 14%.

The NBFC-MFIs serve the largest share of microfinance clients, accounting for 70% of the total active clients. NBFCs account for a further 14%, while Societies, Trusts, MACS or Cooperatives and Pvt. Ltd. Coms collectively serve nearly 16% of active clients. Sec. 8 Companies account for a marginal share of 0.3%. From a size perspective, Very Large MLIs (GLP > ₹5,000 Cr.) collectively account for nearly 68% of the active client base reported by the 178 MLIs.

3 Clients of MLIs are essentially Loan Borrowers. ‘Clients’ and ‘Borrowers’ have been used interchangeably throughout this entire report.
Figure 3.2: Outreach of MLIs to Active Borrowers (in lakhs): Yearly Trend and Category–wise Breakup as of March 2026

A further segregation of the total client outreach based on the legal forms of MLIs and the size of MLIs is given below:

Note: In the decadal trend graph of active borrowers given above, the number of active borrowers in each year (from 2016-2026) represented by blue bars, includes active borrowers of all the Micro Lending Institutions (MLIs), however for FY 2025-26, the break-up of total number of active borrowers (i.e. 558 lakhs) is segregated as MFIs (NBFC-MFIs, Societies, Sec.8 Coms, Trust, MACS or Cooperatives), (represented by red bar), NBFCs (represented by green bar), and Pvt. Ltd. Coms (represented by orange bar) to get a better understanding of the growth of the MFIs.

3.3.1 New Borrowers4

The business expansion of MLIs is primarily driven by the addition of new borrowers. As per reported data, 146 MLIs added nearly 108 lakhs new borrowers during FY 2025-26, compared to 129 lakhs new borrowers added by 158 MLIs in the previous year. NBFC-MFIs had a dominant share, with 93 lakhs accounting for 86% of the total, while Very Large MLIs (with GLP >₹5,000 Cr.) contributed 64 lakhs, representing 59% of the new borrowers added.

4 It is noteworthy that many of the borrowers classified as “new” may not be entirely new to credit, but rather new to the reporting MLI during the financial year.
Figure 3.3: No. of MLI New Borrowers (in lakhs) added and Category–wise Breakup during FY 25-26

3.3.2 Rural–Urban Share of MLI Active Borrowers

MLIs serve low-income borrowers in both rural and urban markets. The rural–urban composition has changed over time. Urban borrowers represented a larger share in FY 2016, as reflected in Figure 3.4. The subsequent transition of several large, predominantly urban NBFC-MFIs into SFBs altered the composition of the remaining MLI portfolio. The current client base is predominantly rural, consistent with the continuing importance of rural markets in India. The data also shows an increasing share of rural clients from 2023 onwards. Smaller MLIs have generally retained a rural focus, although some institutions operate exclusively in urban markets.

Figure 3.4: Trends in Rural-Urban Share of MLI Active Borrowers

3.3.3 Outreach to special segment of Microfinance Active Borrowers

The microfinance sector’s active borrower base reflects strong financial inclusion across priority categories mandated under RBI’s Priority Sector Lending framework. Scheduled Caste/Scheduled Tribe (SC/ST) borrowers constitute 24% of the microfinance active borrowers, while Minority community borrowers (Muslim, Christian, Sikh, Buddhist, Parsis, Jain) represent 16%, and persons with disabilities (differently abled) comprise 1%. Economically, half (50%) of all active borrowers hold Below Poverty Line (BPL) cards, underscoring outreach to the most vulnerable segments. Gender inclusion remains a cornerstone of the portfolio, with women borrowers accounting for 98% of the total active borrower base.

Table 3.2: Composition of Microfinance Active Borrowers- Category-wise
Composition of Special Segment of Microfinance Active Borrowers
Women Borrowers SC/ST Borrowers Minority Borrowers Differently Abled Borrowers Borrowers having BPL Card
98% 24% 16% 1% 50%