91percent of Microfinance Loans Used for Income Generation: Sa-Dhan Bharat Report 2025
Hyderabad, October 10, 2025: According to the Bharat Microfinance Report 2025, prepared by Sa-Dhan in partnership with NABARD, the microfinance sector had a total active client base of 8.28 crore and a loan outstanding of ₹3,81,225 crore at the end of FY2024-25. This data encompasses Banks, Small Finance Banks (SFBs), NBFCs, NBFC-MFIs, and other lenders. While the sector saw a slight decline in client base and loan outstanding, the Self-Help Group (SHG) Bank linkage program continued to grow, with over 84 lakh SHGs credit-linked and total outstanding crossing ₹3 lakh crore. Additionally, around 143 lakh SHGs representing 17 crore households were savings-linked under the program.
The sector recorded 13.99 crore loan accounts as of March 31, 2025. NBFC-MFIs contributed the largest share of the loan portfolio, followed by Banks, SFBs, NBFCs, and other lenders.
The report highlights that Micro Lending Institutions (MLIs) are serving over 6 crore active clients, with a substantial loan portfolio, including a managed portfolio supported primarily by Business Correspondents. Loan utilization indicates that the vast majority of loans are directed towards income-generating activities, reflecting the sector’s focus on supporting livelihoods.
The microfinance sector continues to operate on a feet-on-street model, employing over 3 lakh personnel across more than 37,000 branches, with the majority of staff working in the field. While the average number of active borrowers per credit officer has declined, this is expected to enhance service quality despite higher operational costs.
NBFCs and NBFC-MFIs together account for a significant portion of the total client base and loan portfolio. MLIs with larger portfolios dominate the sector, and the leading states for microfinancing include Bihar, Tamil Nadu, Uttar Pradesh, West Bengal, and Karnataka.
Shaji KV, Chairman of NABARD, commented:
“Microfinance has emerged as a cornerstone of India’s socio-economic transformation, fostering financial inclusion and empowering women, small and marginal farmers, artisans, and other vulnerable communities. Millions have accessed timely and collateral-free credit, enabling sustainable livelihoods and enterprises. The Bharat Microfinance Report provides valuable insights into the sector’s role as a catalyst for India’s growth and development.”
Jiji Mammen, Executive Director & CEO, Sa-Dhan, added:
“Recent sector stress was largely driven by increased borrower exposure and multiple lenders. Industry leaders and Self-Regulatory Organizations introduced additional guardrails to control lending, which contributed to the sector’s moderated growth. The continued focus on income-generating loans demonstrates the sector’s positive impact on livelihoods and financial inclusion.”
The report was released on 10th October 2025 in Mumbai, in a function attended by leading industry figures including PR Rajagopal (Bank of India), Sonali Shahpurwala (HSBC), Krishnan Venkatesh (HDFC Bank), Govind Narayan Goyal (SBI), Ajit Velonie (CRISIL), and Shaji KV (NABARD).