Microfinance Sector Witness a 4 Million Dip in No. of Borrowers | Current Affairs | Vision IAS

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Microfinance Sector Witness a 4 Million Dip in No. of Borrowers

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Microfinance Sector Contraction

The microfinance sector has experienced a noteworthy contraction as highlighted in the Reserve Bank of India's latest Financial Stability Report.

Key Observations

  • Decline in Active Borrower Accounts: The sector saw a reduction of 4,000,000 borrower accounts.
  • Regulatory Impact: Increased regulatory oversight and stricter underwriting practices have curtailed new borrower additions and slowed lending activity.
  • Bank Credit Reduction: Credit flow to microfinance institutions has been negatively affected.
  • Credit Decline Statistics:
    • Bank credit to the sector decreased by 13.8% during FY25.
    • This decline reduced the sector's overall share to 48.3%.
  • Growing Segment Stress: There is increasing caution among lenders due to rising portfolio risks.
  • Tags :
  • Financial Stability Report.
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