India Microfinance Market Analysis and Global Forecast 2023-2033

India Microfinance Market Overview

The India Microfinance market was valued at $ 34,656.7 million in 2023 and is anticipated to grow at a CAGR of 12.58% from 2024 to 2034. 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.

Global India Microfinance Market Synopsis

COVID-19 Impact Analysis

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.

Global India Microfinance Market Dynamics

The major factors that have impacted the growth of India Microfinance are as follows:

Drivers:

⮚      Technological Advancements

The adoption of digital technology in the financial sector has revolutionized the microfinance industry. Mobile banking, digital payment systems, and online loan applications have made it easier and more cost-effective for MFIs to reach remote areas and for clients to access services.

Restraint:

• Credit Risk and Defaults

High credit risk and defaults remain significant concerns for MFIs. The informal nature of income sources for many borrowers makes it difficult to assess their creditworthiness accurately. Economic downturns, natural disasters, and other unforeseen events can further exacerbate the risk of defaults.

Opportunity:

⮚      Digital Financial Services

The rapid adoption of digital technology offers significant opportunities for MFIs to enhance their operations and outreach. Digital financial services, including mobile banking, digital wallets, and online loan applications, can streamline processes, reduce operational costs, and improve access to financial services in remote and underserved areas. The increased penetration of smartphones and internet connectivity facilitates the widespread adoption of these digital solutions.

India Microfinance Market Segment Overview

By Tenure

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.

By Purpose

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.

By Provider Type

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.

Competitive Landscape

The competitive landscape includes key players (tier 1, tier 2, and local) having a presence across the globe. Companies such as Bharat Financial Inclusion Limted, CreditAccess Grameen Limited, UTKARSH SMALL FINANCE BANK LIMITED, Ujjivan Financial Services Limited, and Share Microfin Limited are some of the leading players in the global India Microfinance Industry. These players have adopted partnership, acquisition, expansion, and new product development, among others as their key strategies.

Key Market Players:

• Bharat Financial Inclusion Limted
• CreditAccess Grameen Limited
• UTKARSH SMALL FINANCE BANK LIMITED
• Ujjivan Financial Services Limited
• Share Microfin Limited
• Spandana Sphoorty Financial Ltd
• Asmitha Microfin Ltd
• Muthoot Microfin Limited
• Bhartiya Samruddhi Finance Limited (BSFL)
• BSS Microfinance Limited

Key development:

In September 2022, Muthoot Microfin Limited received approval from the Securities and Exchange Board of India (SEBI) to raise INR 700 crore through an Initial Public Offering (IPO), marking a significant development for the company’s expansion and growth plans.

Scope of the Report

Global India Microfinance Market, by Tenure

• Less than 1 Year
• 1-2 Years
• More than 2 Years

Global India Microfinance Market, by Purpose

• Educational
• Clinical
• Pharma & Biotech Companies

Global India Microfinance Market, by Provider Type

• Banks
• Microfinance Institute
• Non-banking Financial Corporation
• Others

Global India Microfinance Market, by Region

• North America
  • US
  • Canada
  • Mexico
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Benelux
  • Nordic
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • South Korea
  • Indonesia
  • Austalia
  • Malaysia
  • India
  • Rest of Asia Pacific
• South America
  • Brazil
  • Argentina
  • Rest of South America
• Middle East & Africa
  • Saudi Arabia
  • UAE
  • Egypt
  • South Africa
  • Rest of Middle East & Africa

 

Parameters	Indicators
Market Size	2033: $131,241.1 Million
CAGR	12.58% CAGR (2023-2033)
Base year	2022
Forecast Period	2023-2033
Historical Data	2021
Report Coverage	Revenue Forecast, Competitive Landscape, Growth Factors, and Trends
Key Segmentations	Tenure, Purpose, Provider Type
Geographies Covered	North America, Europe, Asia-Pacific, Latin America, Middle East, Africa
Key Vendors	Bharat Financial Inclusion Limted, CreditAccess Grameen Limited, UTKARSH SMALL FINANCE BANK LIMITED, Ujjivan Financial Services Limited, Share Microfin Limited, Spandana Sphoorty Financial Ltd, Asmitha Microfin Ltd, Muthoot Microfin Limited, Bhartiya Samruddhi Finance Limited (BSFL), BSS Microfinance Limited
Key Market Opportunities	• Creative Content Generation and Personalization • Advancements technology
Key Market Drivers	• Advancements in AI research and technology • Growing demand for personalized and creative content

 

REPORT CONTENT BRIEF:

• High-level analysis of the current and future India Microfinance Industry trends and opportunities
• Detailed analysis of current market drivers, restraining factors, and opportunities analysis in the future
• Historical market size for the year 2021, and forecast from 2023 to 2033
• India Microfinance market share analysis for each segment
• Competitor analysis with a comprehensive insight into its product segment, financial strength, and strategies adopted.
• Identifies key strategies adopted by the key players including new product development, mergers and acquisitions, joint ventures, collaborations, and partnerships.
• To identify and understand the various factors involved in the global India Microfinance market affected by the pandemic
• To provide year-on-year growth from 2022 to 2033
• To provide short-term, long-term, and overall CAGR comparison from 2022 to 2033.
• Provide Total Addressable Market (TAM) for the Global India Microfinance Market.