Indian Microfinance Reached ₹3.93 Lakh Cr Milestone

Over the past 12 years, India’s microfinance sector has experienced an extraordinary expansion, with its business increasing from ₹17,264 crore in March 2012 to ₹3.93 lakh crore by November 2024—a growth of over 2,100%. 

This significant rise underscores the sector’s pivotal role in promoting financial inclusion and supporting economic development across the nation.

2,100% Growth in 12 Years: Key Highlights

Nationwide Expansion:

• Microfinance institutions (MFIs) now operate in 723 districts, including 111 aspirational districts across 28 states and 8 Union Territories, serving nearly 8 crore borrowers.

Economic Impact:

• The sector contributes 2.03% to India’s gross value added (GVA) and supports approximately 1.3 crore jobs, highlighting its substantial role in the economy.

Challenges and Recommendations:

• Despite this growth, MFIs face challenges such as difficulties in raising low-cost long-term funds and portfolio quality concerns.

• Industry representatives have called for credit guarantee schemes tailored to MFIs, creation of special funds for those operating in the North East, and relaxation of qualifying asset norms to diversify risk.

Digital Transformation:

• Emphasis is placed on enhancing digital infrastructure, including digital loan disbursements and repayments, to improve efficiency and reach.

• The Indian microfinance sector’s evolution from a modest ₹17,264 crore in 2012 to ₹3.93 lakh crore in 2024 reflects its critical role in financial inclusion and economic empowerment.

• Addressing current challenges and embracing digital advancements will be essential for sustaining this growth trajectory.

Final Thoughts

The meteoric 2,100% growth of India’s microfinance sector over the past 12 years is a testament to its vital role in advancing financial inclusion, empowering underserved communities, and contributing meaningfully to the nation’s economy.

With operations now spanning nearly every district and reaching 8 crore borrowers, the sector has firmly established itself as a key driver of grassroots economic development.

However, to sustain this momentum, it is essential to address existing challenges—particularly funding constraints and portfolio risks—while accelerating digital adoption and policy support. Strengthening these areas will ensure that microfinance continues to be a powerful tool for inclusive and sustainable growth in India.