Microfinance Moving Beyond Small Loans As Rs 50,000-Plus Credit Grows, Says Report

India’s microfinance sector is undergoing a quiet, but significant shift. According to a report titled Quarterly Microfinance Lending Insights by CRIF High Mark, even as the overall loan book showed signs of contraction, the size of loans being disbursed was getting steadily larger. This, the report said, signalled a structural change in how microfinance credit was being extended. CRIF High Mark is an RBI-licensed credit bureau in India.

As of December 2025, the aggregated microfinance portfolio outstanding stood at Rs 320.90 lakh crore, down 18 per cent year-on-year (y-o-y), while active loans fell even sharper, by 23 per cent, the report said. Yet, this contraction did not translate into weaker lending momentum. Instead, disbursement value rose 9.20 per cent quarter-on-quarter (q-o-q) in Q3 FY26 to Rs 61.7 lakh crore, indicating that lenders were increasingly writing fewer, but larger loans.

Ticket Size of Loans

This trend was most visible in the ticket size of loans. The average ticket size rose 15.70 per cent y-o-y from Rs 52,000 in Q3 FY25 to Rs 60,200 in Q3 FY26. Loans above Rs 50,000 dominated fresh originations, marking a clear departure from the traditional small-ticket focus of microfinance, the report said.

According to the report, the Rs 50,000-80,000 segment constituted the largest share of loans, accounting for 42.80 per cent of total originations in Q3 FY26, up from 36.80 per cent a year ago. The Rs 80,000-1 lakh segment also expanded considerably, rising from 10.80 per cent to 17.9 per cent over the quarter ending December 2025. In contrast, loans below Rs 50,000 saw steep y-o-y decline, with both the ‘under Rs 30,000’ and ‘Rs 30,000-50,000’ segments shrinking by over 34 per cent.

The report said the shift was being driven by both lender strategy and risk considerations. Delinquency data from the report showed that stress was increasingly concentrated in smaller ticket sizes.

“Portfolio at Risk for accounts that are 180 days or more past due (PAR 180+) (including write-offs) remains structurally high in loans below Rs 50,000, while higher-ticket segments, particularly Rs 80,000 and above continue to report relatively lower delinquency across early and mid-stage buckets,” the report said.

The report said the move towards larger loans was consistent across geographies. All of the top 10 states had shifted their originations mix towards ticket sizes above Rs 50,000. The share of loans above Rs 1 lakh showed a sharp increase in Tamil Nadu, while states, such as Uttar Pradesh, Bihar, Odisha and Kerala also doubled their share in the Rs 80,000-1 lakh category.

Banks led growth in the Rs 50,000-80,000 segment, while non-banking financial companies (NBFCs) and microfinance institutions (MFIs) dominated the Rs 80,000-1 lakh bracket, and small finance banks (SFBs) recorded the fastest growth in loans above Rs 1 lakh.

Borrowers with two or fewer lender associations accounted for nearly 80 per cent of the portfolio, up from just over 70 per cent a year ago. The average number of loans per borrower had also declined from 1.70 to 1.50, reflecting tighter guardrails and a sharper focus on credit quality, the report further said.