Microfinance in India channels 91% of loans towards income generation: Sa-Dhan

The Sa-Dhan Bharat Microfinance Report 2025, released on Friday in Mumbai, revealed that 91% of microfinance loans were utilised for income generation, underscoring the sector’s continued role in supporting livelihoods despite a temporary slowdown.At the end of FY2024–25, the total active client base stood at 8.28 crore, with an overall loan outstanding of ₹3,81,225 crore, based on data from credit information companies and industry sources. The report noted a 13% decline in clients and a 14% de-growth in loan portfolios. Jiji Mammen, Executive Director and CEO of Sa-Dhan, attributed the short-term decline to tighter credit norms: “Industry guardrails and lending restrictions led to temporary de-growth, but with 91% of loans supporting income generation, we expect an improvement this year.”The Self-Help Group (SHG) Bank linkage programme continued to expand, with total outstanding loans reaching ₹3.04 lakh crore across 84.9 lakh SHGs, linking 17.1 crore households to formal credit.Also Read: Liquidity crunch threatens Indian microfinance recovery, says industry leaders
Within the micro-lending ecosystem, NBFC-MFIs and NBFCs accounted for 86% of the total client base and 84% of the sector’s portfolio, with Bihar, Tamil Nadu, Uttar Pradesh, West Bengal, and Karnataka emerging as the top five microfinance states.The report, prepared in partnership with NABARD, captures data from over 200 micro-lending institutions covering 98% of industry operations, offering a comprehensive view of client outreach, financial performance, and regional trends in India’s microfinance landscape.Commenting on the findings, Shaji K.V., Chairman, NABARD, said microfinance has become a “cornerstone of India’s socio-economic transformation,” helping millions access timely and collateral-free credit to build sustainable livelihoods.

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