Chapter 3 - Section 3.4.2Off-Balance Sheet/Managed Loan Portfolio of MLIs

The borrowers typically seek loans for diverse purposes—ranging from loans for emergency and consumption needs to small businesses, working capital, and housing are met through such arrangements. Mainstream lenders often are unable to meet these demands due to the small loan sizes, lack of collateral, and procedural complexities. MLIs have filled this gap, playing a crucial role in serving the financially excluded.

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3.4.2 Off-Balance Sheet/Managed Loan Portfolio of MLIs

The borrowers typically seek loans for diverse purposes—ranging from loans for emergency and consumption needs to small businesses, working capital, and housing are met through such arrangements. Mainstream lenders often are unable to meet these demands due to the small loan sizes, lack of collateral, and procedural complexities. MLIs have filled this gap, playing a crucial role in serving the financially excluded.

MLIs use securitisation and direct assignment to mobilise resources for portfolio growth. Some institutions also operate as Business Correspondents (BCs), enabling them to originate and service loans on behalf of Banks and Financial Institutions without having to bother for raising funds for their operations and expanding business. It basically provides margin, which adds to their income through fees. These arrangements also support lenders in meeting priority-sector objectives and provide MLIs with an income stream, while helping address funding and capital constraints. Although MLIs manage the portfolios operationally, the assets do not sit on their books, and they report them as Off-Balance-Sheet portfolios.

As of March 31, 2026, 99 MLIs reported a Managed Portfolio of ₹73,027 Cr., which are classified as Off-Balance-Sheet portfolio, compared with ₹72,930 Cr. at the end of FY 2024-25. The Managed Portfolio has grown by a meagre 0.1% during FY 2025-26. Figure 3.6 presents the category-wise distribution of this portfolio.

Figure 3.6: Managed/Off-Balance-Sheet Loan Portfolio of MLIs (in ₹ Cr.) –Yearly Trend and Category–wise Breakup as of March 2026

A further segregation of the Managed Loan Portfolio based on the legal forms of MLIs and the size of MLIs is given below:

Note: In the decadal trend graph of the Managed Portfolio (2016–2026) shown above, the Managed Portfolio for each year is represented by blue bars, covering all Micro Lending Institutions (MLIs). For FY 2025-26, however, the total Managed Portfolio of ₹73,027 Cr. has been further disaggregated to provide clearer insights. The breakdown highlights MFIs (NBFC-MFIs, Societies, Sec. 8 Coms, Trusts, MACS, or Cooperatives) shown in red, NBFCs in green, and Pvt. Ltd. Coms in orange, offering a clearer picture of the growth pattern of MFIs.