India's ₹3.31L/cr microfinance vulnerable to El Nino, West Asia tensions
India's ₹3.31 lakh crore microfinance sector is facing fresh challenges as a weak monsoon (thanks to El Nino) and tensions in West Asia threaten rural incomes and recovery.
The Reserve Bank of India has flagged concerns about inflation and supply chain hiccups, making the road ahead a bit uncertain for both borrowers and lenders.
Loan disbursements hit 8-quarter high
Despite these risks, the sector showed strong growth by March 2026: loan disbursements hit an eight-quarter high, and unpaid loans dropped sharply.
A ₹20,000 crore credit guarantee scheme was also extended to help out.
Still, Microfinance Industry Network (MFIN) CEO Alok Misra says banks need to step up support: "Recent extension of the scheme till August 2026 will allow sufficient time for utilization," and "It is time for banks to come forward and actively support the cause of financial inclusion," he urged.