Market Highlights
The Global India Microfinance market is projected to be valued at USD 34,656.7 million by 2033, recording a CAGR of around 12.58% during the forecast period. The microfinance market in India provides financial services to the underserved and low-income segments, primarily in rural areas. It encompasses small loans, savings, insurance, and other basic financial products aimed at fostering financial inclusion and entrepreneurship. The market is driven by a mix of Non-Banking Financial Companies (NBFCs), microfinance institutions (MFIs), and self-help groups (SHGs). Regulatory frameworks and government initiatives, like the Pradhan Mantri Jan Dhan Yojana, support its growth. Despite challenges like high-interest rates and over-indebtedness, the sector plays a crucial role in poverty alleviation and economic empowerment.
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The COVID-19 pandemic significantly impacted India’s microfinance market, causing disruptions in loan disbursements and collections due to lockdowns and economic slowdowns. Many borrowers faced income losses, leading to increased defaults and higher non-performing assets (NPAs). However, the sector showed resilience with digital adoption and government support through relief measures and moratoriums. The pandemic underscored the need for robust risk management and diversification strategies within the microfinance institutions.
Segmental Analysis
The global India Microfinance market has been segmented based on Tenure, Purpose, Provider Type
Based on the Tenure, the market is segmented based on Less than 1 Year, 1-2 Years and More than 2 Years. In the Indian microfinance market, loans with a tenure of 1-2 years dominate, as they balance affordability for borrowers with manageable risk for lenders, while shorter and longer-term loans also cater to specific financial needs and repayment capacities.
Based on the Purpose, the market has been divided into Educational, Clinical, Pharma & Biotech Companies. In the Indian microfinance market, the dominant purposes for microloans are primarily for entrepreneurial and income-generating activities, followed by significant allocations towards educational and clinical needs, supporting overall socio-economic development.
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Based on Provider Type, the market has been divided into Banks, Microfinance Institute, Non-banking Financial Corporation and Others. In the Indian microfinance market, Non-Banking Financial Corporations (NBFCs) and Microfinance Institutions (MFIs) dominate by providing the majority of microloans and financial services, while banks and other entities also play significant roles in extending financial inclusion to underserved populations.