Daijiworld Media Network- Chennai

Chennai, May 26: The microfinance industry is reeling under financial strain, as several listed microfinance institutions (MFIs) reported heavy losses or a steep fall in profits for the March quarter of FY25. Sector-wide challenges—ranging from rising credit costs and deteriorating asset quality to borrower overleveraging—have significantly impacted performance across the board.

Among the worst hit, Muthoot Microfin posted a staggering net loss of Rs 401 crore in Q4 FY25, while Fusion Finance (formerly Fusion Micro Finance) followed with a loss of Rs 164 crore.

Meanwhile, CreditAccess Grameen, one of the leading players in the sector, saw its net profit crash by 88%, slipping to Rs 47 crore from Rs 397 crore in the same period last year.
Similarly, Satin Creditcare Network reported a 67% decline in its standalone profit after tax (PAT), which dropped to Rs 41 crore from Rs 125 crore.

Industry experts attribute the downturn to a combination of factors, including rising borrower overlaps and stress in rural repayment behaviour.

“The gross non-performing asset (GNPA) ratio for the microfinance sector surged to 16% by the end of FY25, a sharp jump from 8.8% a year ago. This signals a substantial increase in defaults,” noted Mahendra Patil, founder and managing partner of MP Financial Advisory Services LLP.

Despite the grim financials, Patil remains cautiously optimistic. He projects that the sector could witness a 12–15% growth in FY26 under a conservative scenario, essentially rebounding to FY24 performance levels.

As the microfinance industry stares at a period of consolidation and cautious lending, stakeholders are now pinning hopes on regulatory support and rural economic revival to steer through the turbulence ahead.