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Microfinance Sector Set for Strong Comeback as AUM Growth May Reach 20% in FY27

India's microfinance sector is expected to rebound strongly in FY27, with AUM growth projected at 20% as lenders expand secured lending and improve portfolio quality.

Asian Media Network | Published on: Jul 1, 2026, 9:49 PM
Bussiness/Travel

Mumbai, July 1

: India's microfinance sector is expected to stage a strong recovery in FY27, with assets under management (AUM) likely to grow by around 20% after witnessing a subdued performance in the previous financial year. 

The anticipated rebound is expected to be driven by lenders expanding beyond traditional group microfinance loans and increasing their focus on secured lending products such as gold loans, loans against property, MSME finance, and individual retail loans.

Industry experts believe this diversification strategy will help reduce dependence on unsecured lending, strengthen portfolio quality, and create new growth opportunities. Improving collections, better credit discipline among borrowers, and stronger risk management practices are also expected to support the sector's recovery.

 After facing pressure from higher delinquencies and slower loan disbursements in recent years, microfinance institutions are now positioning themselves for sustainable growth through a balanced lending portfolio and improved operational efficiency.

 

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