India Microfinance Market By Provider Type (Banks, NBFCs, Fintech), By Purpose (Agriculture, Manufacturing/Production, Trade & Services, Household, Others (Consumer Durable, Vehicle, etc.), By Tenure (Less than 1 Year, 1-2 Years, More than 2 Years), By Region, Competition Forecast & Opportunities, 2019-2029

Industry : BFSI
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Published Date : NA

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Summary

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Report Description

Forecast Period	2025-2029
Market Size (2023)	USD46.12 Billion
CAGR (2023-2028)	7.20%
Fastest Growing Segment	NBFCs
Largest Market	South India

India microfinance market was valued at USD46.12 Billion in 2023 and is anticipated to grow with a CAGR of 7.20% through 2029. The India microfinance market will experience robust growth in the forecast period owing to the growing technological advancements such as penetration of mobile phones, which has made it possible for the microfinance companies to easily reach to larger masses. Moreover, significant government regulations are likely to support the growth of microfinance market in India.

India Microfinance Market Scope

Giving small loans to low income people or small enterprises that may not be able to use traditional banking services so they may meet their financial obligations are referred to as microfinance.

India Microfinance Market Overview

In India, the low income group is unable to get loans from the traditional banks as they do not have any credit history and are also not able to provide any security to the banks. Thus, to solve this problem the microfinance companies in India were launched which provide unsecured loans with less paperwork to the under privileged section of the society. According to the article published by Business Standard in 2022, the microfinance industry in India grew over 16 times in the last decade with a loan portfolio of USD34.78 billion as per the study done by Microfinance Institutions Network.

India Microfinance Market Drivers

Several factors are responsible for the rising demand for microfinance services in India. One of the key causes is that low-income households lack access to credit and other financial services. It is challenging for these households to get formal credit since they often have no collateral to offer for conventional bank loans and may not have a good credit record. These loans are frequently used to launch or grow small businesses, pay for unforeseen costs, fund investments in healthcare and education, and raise overall household income and living standards. The expansion of India's informal economy is another factor driving up demand for microfinance services. Many low-income households are employed in the unregulated, erratic informal economy. Microfinance organizations offer these households a flexible and easily available source of credit that can assist them in managing their cash flow and making investments in their enterprises.

In recent years, India's microfinance industry has experienced considerable technological developments, notably with the growing use of mobile devices and online platforms. Many microfinance institutions (MFIs) have implemented mobile banking technologies to offer financial services to their consumers in response to the increasing adoption of mobile phones. Customers can now access their accounts, conduct transactions, and receive loan disbursements and repayments immediately on their mobile devices through mobile banking. To promote digital payments and transactions in the microfinance industry, a number of digital platforms have been created, including the Bharat Bill Payment System (BBPS), National Automated Clearing House (NACH), and Aadhaar Enabled Payment System (AEPS). These platforms have made it possible for MFIs to electronically disperse loans and collect payments, which eliminates the need for physical presence and paperwork.

India Microfinance Market Trends

The COVID-19 pandemic has accelerated up the deployment of digital technologies in the microfinance industry since MFIs have had to come up with strategies to continue serving their clients while abiding by social segregation standards. There are various advantages for the Indian microfinance business as a result of the growing focus on digitization. MFIs are able to serve clients in remote locations where physical branches might not be practical due to digital technologies including mobile banking, internet platforms, and digital wallets. The costs of maintaining physical branches and paperwork, as well as transaction fees, have all been reduced by digitization in traditional banking. Through the use of tools like mobile banking, rapid approvals, and online loan applications, MFIs are now able to provide a more seamless and easy customer experience. Digitization has enabled MFIs to disburse loans and receive repayments faster, reducing the turnaround time for loan processing and improving the overall efficiency of operations. Digital technologies have enabled MFIs to collect and manage client data more efficiently, which can help in better risk assessment and credit scoring. By providing a wider range of financial services, service diversification can increase client loyalty, boost retention rates, and increase the lifetime value of each client.

In India's microfinance industry, collaboration and cooperation are significant trends as micro finance institutions seek to broaden their client base and provide vulnerable individuals with more effective and innovative financial services. Moreover, microfinance companies can offer a larger range of financial services beyond microcredit, such as savings, insurance, and remittances, by collaborating with banks, FinTech’s and other organizations. Partnerships with fintech firms can assist MFIs in utilizing digital platforms and technology to increase the productivity and scalability of their operations. Collaboration with other MFIs or groups can enable MFIs to pool resources and knowledge, thereby cutting costs and increasing overall operational effectiveness.

India Microfinance Market Challenges

India is a developing nation with a low literacy rate as only 25% of the India population is financially literate, however it is still higher in its rural parts. The majority of Indians lack a fundamental understanding of financial principles. The general public has limited awareness of the financial services offered by the microfinance sector. A major barrier preventing the rural populace from obtaining easy credit from MFIs to meet their financial needs is this lack of adequate understanding. Additionally, it contributes to the nation's widespread financial exclusion as MFIs also have the extra responsibility of educating the public and building trust before they begin lending money. In addition to the extreme lack of knowledge about the policies and goods offered by MFIs, these institutions struggle to survive in the highly competitive markets found in developing countries.

Moreover, in India, MFIs' financial success is limited when compared to that of the nation's commercial banks. The long-standing banking system is well-established in India and is gradually changing to meet modern demands. When compared to commercial banks (8–12%), the majority of microfinance institutions charge very high interest rates (12–30%). Since the microfinance industry works with underprivileged groups in Indian society who want to raise their standard of living, excessive debt is a major barrier to its expansion. The two biggest issues straining the microfinance sector in India are the rising trend of clients taking out multiple loans and ineffective risk management. Providing loans without security raises the risk of bad debts in the microfinance industry.

Recent Developments

To strengthen its position as a national player, Inditrade Microfinance, a division of Inditrade Capital, merged with Kolkata-based Janakalyan Financial Services in 2022. The new company will be called Inditrade Janakalyan Microfinance Limited.

In 2020, Madura Micro Finance Ltd., an unlisted non-banking financial company merged into Credit Access Grameen Ltd. a listed non-banking financial company.

The microlender Satin Creditcare Network merged its wholly owned subsidiary Taraashna Financial Services (TFSL), which offers business correspondent services, with MSME lender Satin Finserv Limited (SFL) in March 2023 to take advantage of the underlying synergies and to build capabilities that would strengthen the combined entity.

Market Opportunities

· Due to the country's limits on its banking services' ability to reach the millions of people living in rural areas, microfinance organizations can grow their market share and draw in a wider customer base. In addition to the country's large size, another barrier preventing financial services from reaching these millions of people is the low literacy rate among the most vulnerable population in the most remote areas. Thus, microfinance continues to be a crucial weapon for India's mission to advance as a significant economic force. Only 5% of the country's population now has access to microfinance loans. According to the most recent instructions given to MFIs by the RBI, more than 50% of the population is qualified for microloans.

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Market Segmentation

The India microfinance market is segmented based on provider type, purpose, tenure, region and competitive landscape. Based on provider type the market is divided into banks, NBFCs, Fintech. On the basis of purpose, the market is fragmented into agriculture, manufacturing/production, trade & services, household and others, including consumer durable, vehicle, etc. Further, based on tenure the market is segmented into less than 1 year, 1-2 years, more than 2 years.

Company Profiles

Ujjivan Financial Services Limited, Asmitha Microfin Ltd., Utkarsh Small Finance Bank Limited, CreditAccess Grameen Limited, Share Microfin Limited, Spandana Sphoorty Financial Ltd., Bhartiya Samruddhi Finance Limited (BSFL), Bharat Financial Inclusion Limited, BSS Microfinance Limited, Muthoot Microfin Limited are some of the leading companies in the India microfinance market.

Attribute	Details
Base Year	2023
Historic Data	2019 – 2022
Estimated Year	2024
Forecast Period	2025– 2029
Quantitative Units	Value in USD Million, CAGR for 2019-2023 and 2024-2029
Report Coverage	Revenue forecast, company share, competitive landscape, growth factors, and trends
Segments Covered	Provider Type Purpose Tenure Region
Regional scope	North, West, South, East
Key Companies Profiled	Ujjivan Financial Services Limited, Asmitha Microfin Ltd., Utkarsh Small Finance Bank Limited, CreditAccess Grameen Limited, Share Microfin Limited, Spandana Sphoorty Financial Ltd., Bhartiya Samruddhi Finance Limited (BSFL), Bharat Financial Inclusion Limited, BSS Microfinance Limited, Muthoot Microfin Limited
Customization scope	10% free report customization with purchase. Addition or alteration to country, regional & segment scope.
Pricing and purchase options	Avail customized purchase options to meet your exact research needs. Explore purchase options
Delivery Format	PDF and Excel through Email (We can also provide the editable version of the report in PPT/Word format on special request)

Report Scope:

In this report, India Microfinance Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

India Microfinance Market, By Provider Type:

Banks
NBFCs
Fintech

India Microfinance Market, By Purpose:

Agriculture
Manufacturing/Production
Trade & Services
Household
Others (Consumer Durable, Vehicle, etc.)

India Microfinance Market, By Tenure:

Less than 1 year
1-2 years
More than 2 years

India Microfinance Market, By Region:

North
West
South
East

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in India microfinance market.

Available Customizations:

With the given market data, TechSci Research offers customizations according to a company’s specific needs. The following customization options are available for the report:

Company Information

Detailed analysis and profiling of additional market players (up to five).

India Microfinance Market is an upcoming report to be released soon. If you wish an early delivery of this report or want to confirm the date of release, please contact us at [email protected]

Table of content

1. Introduction

1.1. Market Overview

1.2. Key Highlights of the Report

1.3. Market Coverage

1.4. Market Segments Covered

1.5. Research Tenure Considered

2. Research Methodology

2.1. Objective of the Study

2.2. Baseline Methodology

2.3. Key Industry Partners

2.4. Major Association and Secondary Sources

2.5. Forecasting Methodology

2.6. Assumptions and Limitations

3. Executive Summary

3.1. Market Overview

3.2. Market Forecast

3.3. Key Regions

3.4. Key Segments

4. Voice of Customer Analysis (B2C Market)

4.1. Sample Size Determination

4.2. Respondent Demographics

4.2.1. By Gender

4.2.2. By Age

4.2.3. By Occupation

4.3. Brand Awareness

5. India Microfinance Market Outlook

5.1. Market Size & Forecast

5.1.1. By Value

5.2. Market Share & Forecast

5.2.1. By Provider Type Market Share Analysis (Banks, NBFCs, Fintech)

5.2.2. By Purpose Market Share Analysis (Agriculture, Manufacturing/Production, Trade & Services, Household, Others (Consumer Durable, Vehicle, etc.))

5.2.3. By Tenure Market Share Analysis (Less than 1 year, 1-2 years, More than 2 years)

5.2.4. By Region

5.2.5. By Company (2023)

5.3. India Microfinance Market Mapping & Opportunity Assessment

5.3.1. By Provider Type Market Mapping & Opportunity Assessment

5.3.2. By Purpose Market Mapping & Opportunity Assessment

5.3.3. By Tenure Market Mapping & Opportunity Assessment

5.3.4. By Regional Market Mapping & Opportunity Assessment

6. India Banks Market Outlook

6.1. Market Size & Forecast

6.1.1. By Value

6.2. Market Share & Forecast

6.2.1. By Purpose

6.2.2. By Tenure

7. India NBFCs Market Outlook

7.1. Market Size & Forecast

7.1.1. By Value

7.2. Market Share & Forecast

7.2.1. By Purpose

7.2.2. By Tenure

8. India Fintech Market Outlook

8.1. Market Size & Forecast

8.1.1. By Value

8.2. Market Share & Forecast

8.2.1. By Purpose

8.2.2. By Tenure

9. Market Dynamics

9.1. Drivers

9.1.1. Several government initiatives

9.1.2. Technological advancements

9.1.3. Increasing demand for microfinance services

9.2. Challenges

9.2.1. Low financial literacy

9.2.2. High interest rates

10. Impact of COVID-19 on India Microfinance Market

10.1. Impact Assessment Model

10.1.1. Key Segments Impacted

10.1.2. Key Regions Impacted

10.1.3. Key Distribution Channel Impacted

11. Market Trends & Developments

11.1. Merger & Acquisitions

11.2. Diversification of Services

11.3. Increased focus on Digitization

11.4. High demand from rural areas

12. Porter’s Five Forces Model

12.1. Competitive Rivalry

12.2. Bargaining Power of Buyers

12.3. Bargaining Power of Suppliers

12.4. Threat of New Entrants

12.5. Threat of Substitutes

13. SWOT Analysis

13.1. Strengths

13.2. Weaknesses

13.3. Opportunities

13.4. Threats

14. Competitive Landscape

14.1. Company Profiles

14.1.1. Ujjivan Financial Services Limited

14.1.1.1. Company Details

14.1.1.2. Product & Services

14.1.1.3. Financials (As Per Availability)

14.1.1.4. Key market Focus & Geographical Presence

14.1.1.5. Recent Developments

14.1.2. Asmitha Microfin Ltd.

14.1.2.1. Company Details

14.1.2.2. Product & Services

14.1.2.3. Financials (As Per Availability)

14.1.2.4. Key market Focus & Geographical Presence

14.1.2.5. Recent Developments

14.1.3. Utkarsh Small Finance Bank Limited

14.1.3.1. Company Details

14.1.3.2. Product & Services

14.1.3.3. Financials (As Per Availability)

14.1.3.4. Key market Focus & Geographical Presence

14.1.3.5. Recent Developments

14.1.4. CreditAccess Grameen Limited

14.1.4.1. Company Details

14.1.4.2. Product & Services

14.1.4.3. Financials (As Per Availability)

14.1.4.4. Key market Focus & Geographical Presence

14.1.4.5. Recent Developments

14.1.5. Share Microfin Limited

14.1.5.1. Company Details

14.1.5.2. Product & Services

14.1.5.3. Financials (As Per Availability)

14.1.5.4. Key market Focus & Geographical Presence

14.1.5.5. Recent Developments

14.1.6. Spandana Sphoorty Financial Ltd.

14.1.6.1. Company Details

14.1.6.2. Product & Services

14.1.6.3. Financials (As Per Availability)

14.1.6.4. Key market Focus & Geographical Presence

14.1.6.5. Recent Developments

14.1.7. Bhartiya Samruddhi Finance Limited (BSFL)

14.1.7.1. Company Details

14.1.7.2. Product & Services

14.1.7.3. Financials (As Per Availability)

14.1.7.4. Key market Focus & Geographical Presence

14.1.7.5. Recent Developments

14.1.8. Bharat Financial Inclusion Limited

14.1.8.1. Company Details

14.1.8.2. Product & Services

14.1.8.3. Financials (As Per Availability)

14.1.8.4. Key market Focus & Geographical Presence

14.1.8.5. Recent Developments

14.1.9. BSS Microfinance Limited

14.1.9.1. Company Details

14.1.9.2. Product & Services

14.1.9.3. Financials (As Per Availability)

14.1.9.4. Key market Focus & Geographical Presence

14.1.9.5. Recent Developments

14.1.10. Muthoot Microfin Limited

14.1.10.1. Company Details

14.1.10.2. Product & Services

14.1.10.3. Financials (As Per Availability)

14.1.10.4. Key market Focus & Geographical Presence

14.1.10.5. Recent Developments

15. Strategic Recommendations/Action Plan

15.1. Key Focus Areas

15.2. Target Regions

15.3. Target Purpose Type

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Figures and Tables

Frequently asked questions

What are the trends in the India microfinance market?

The India Microfinance Market is expected to witness high demand in the coming years due to the growing technological advancements in the country, such as penetration of mobile phones in the rural areas, which is creating a huge opportunity for the market growth.

What are the drivers for the India microfinance market?

The India Microfinance market is experiencing high growth due to the rising consumers awareness regarding the benefits associated with services provided by microfinance companies in India and the governments initiatives for the microfinance sector in India.

What are the challenges in India microfinance market?

The low literacy rate in India specifically in the rural areas and the high interest rates offered by microfinance companies and the over-indebtedness are restraining the growth of India microfinance market.

What are the major companies operating in the India microfinance market?

Ujjivan Financial Services Limited, Asmitha Microfin Ltd., Utkarsh Small Finance Bank Limited, CreditAccess Grameen Limited, Share Microfin Limited, Spandana Sphoorty Financial Ltd., Bhartiya Samruddhi Finance Limited (BSFL), Bharat Financial Inclusion Limited, BSS Microfinance Limited, Muthoot Microfin Limited are some of the major companies operating in the India Microfinance Market.

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Press Release

India Microfinance Market is Being Fueled by Loans Provided by NBFCs

May, 2023

The increasing demand for microfinance services among low-income group, government policies and diversification of services provided by the microfinance companies are driving the growth of microfinan