Micro Finance Company NBFC

NBFC-MFIs Top Micro-Credit Providers in India: Industry Report

NBFC-MFIs have emerged as the top micro-credit provider in India, surpassing scheduled banks in their contribution. The registered microfinance company plays an important role in offering small loans to low-income groups and driving financial inclusions. The report highlights their significant market share and growing influence in microfinance. This dominance underscores the importance of the NBFC-MFIs in empowering SMEs to support economic development. 

Role of NBFC-MFIs Top Micro-Credit Providers in India

Micro-credit Providers within NBFC-MFIs are important in fostering financial inclusion by offering small, accessible loans to low-income and underserved populations. This institution bridges the gap between traditional banks and underserved communities, enabling individuals to start or expand small businesses, meet urgent financial needs, and improve their livelihoods.

By providing micro-loans without requesting collateral, the registered NBFC and microfinance institutions empower borrowers to achieve economic self-sufficiency and flexibility. Additionally, they contribute to local economic growth and development as increased access to credit inspires business activity and job creation in economically weaker areas.

MFIN Report on NBFC-MFIs Top Micro-Credit Provider in India

NBFC-MFIs and schedule banks are the primary players in the disbursal of micro-credit in India. The NBFC-MFIs surpass banks to emerge as a leading player as Micro-credit providers of microfinance. By March 31, 2024, the gross loan portfolio for micro-credit reached Rs 4.33 Lakh Crore, nearly 40% of this was disbursed by the NBFC-MFIs and 33% by scheduled banks as per the report stated by Microfinance Industry Network. The small finance banks contributed 17% and NBFCs 9% to the overall disbursal of micro-credit.

The assets under management (AUM) for MFIs stood at Rs 1,56,884 crore with approx. 4.3 crore clients having outstanding loans from NBFC-MFIs. The average loan amount disbursed per account in the 2023-2024 fiscal years was Rs 45,024, a 9.9% increase from the previous year. Also, during the same period, NBFC-MFIs received debt funding of Rs 89,308 crore, marking a 29% rise over the 2022-23 financial year.  

Top 10 Leading Micro-Finance Companies as Micro-Credit Providers in India

There are the top 10 leading micro-finance companies as micro-credit providers in India are briefly stated below:

1. Equitas Small Finance Bank

Equitas offers small loans ranging from Rs 2000 to Rs 35000 to the economically weaker section and low-income group categories. Equitas has provided loans to small-scale businesses, transforming the lives of 3 million microfinance customers across 17 states. In addition to microfinance, the bank offers affordable housing loans and financing solutions for commercial vehicles, supporting both families and small businesses.

2. Bandhan Bank

It was established in 2001 as a microfinance company and transformed into a bank in 2015, Bandhan bank is one of India’s largest microfinance institutions, The bank offers a wide range of financial products and services including microloans, saving accounts and insurance products. Its main aim is to reduce socio-economic poverty by providing cost-effective financial and non-financial products to low-income households.  

3. Bharat Financial Inclusion Limited

Formerly known as SKS Microfinance, Bharat Financial Inclusion Limited operates as an NBFC that provides microcredit services to low-income households. It has extensive branch networks across India and offers microloans for income-generating activities, emergency needs, and home improvements.

4. Arohan Financial Services Limited

As the largest NBFC-MFIs in Eastern India, Arohan Financial Services offers financial inclusion products and MSME lending to 1.9 million customers. It offers microfinance services to economically weaker individuals and micro-entrepreneurs for business expansion, education and healthcare along with micro-insurance and pension products in partnership with leading insurance providers.

5. Janalakshmi Financial Services (Jana Small Finance Bank)

It was originally known as Janalakshmi Financial Services; Jana Small Finance Bank offers microfinance services to low-income households and micro-entrepreneurs. Since its establishment in 2000, the bank has provided microloans for business expansion, education and healthcare through its extensive branch network across India.

6. Spandana Sphoorty Financial Limited

Spanda Sphoorty Financial Limited, founded in 1998, is an NBFC-MFI that provides microfinance services to economically disadvantaged individuals and micro-entrepreneurs. Operating across several Indian States, the company offers micro-loans for diverse purposes, including business expansion, education, and healthcare, and has significantly promoted financial inclusion in rural areas.

7. Muthoot Microfin Limited

Muthoot Mircorfin Limited is a well-known private lending entity dedicated to offering life-improvement loans, such as education, solar, health, etc. This institution focuses on giving back to society by providing micro-loans to rural women from low-income households, supporting their entrepreneurial efforts.

8. Cashpor Micro Credit

It’s a subsidiary of Cashpor Financial and Technical Services, based in Varanasi, and ranks among the top 10 NBFCs in India. It specializes in offering micro-credit services to rural areas, providing loans for non-income-generating activities and asset acquisitions to improve public facilities.

9. BSS Microfinance Limited

BSS Microfinance Limited has been operating since 1999. It transitioned to microfinance in 2008, focusing on providing loans to economically challenged individuals, especially women. The company operates in Maharashtra, Karnataka, Tamil Nadu, and Madhya Pradesh, with a mission to improve financial management and enhance the quality of life for individuals through better earnings.

10. CreditAccess Grameen

As one of India’s largest MFIs, CreditAccess Grameen operates in 637 districts across 16 states and union territories with 1894 branches. The company leverages innovation, digital technology, and data analytics to expand its reach and offer tailored financial solutions. It is recognized for its social responsibility, providing various loans, including income-generation, family welfare and emergency loans.

Rise of the Micro-Credit Provider in India

The rise of micro-credit providers in India marks an important shift in the financial framework to foster financial inclusion and economic empowerment. Over the past few years, micro-credit institutions, including NBFCs and micro-financial institutions (NBFC-MFIs), have addressed the demand for small, accessible loans.

It’s the NBFC-MFIs have significantly widened their lead over banks in the microfinance segment. Their success has continued into the current year, constituting 39.1% of the overall industry portfolio. With a total loan outstanding of Rs 1.4 lakh crore, the banks hold the second largest share in micro-credit.

NBFC-MFIs bridge the gap left by traditional banks, which often overlook low-income individuals due to the perceived risk and lack of collateral. They offer small loans ranging from thousands to lakhs to individuals and small businesses. This has enabled millions of entrepreneurs, especially women, to start and expand their businesses, improve their homes, and invest in education and healthcare.

Outlook for the Indian Micro Lending Market Until 2028

The Indian Micro Lending Market is forecasted to grow at a robust CAGR of 11% from 2022 to 2028, driven by factors such as the large unbanked populations, increasing microenterprises numbers, government support for microfinance and widespread adoption of digital technology and mobile services.

The Microlending market is going to lead globally. The Indian microfinance sector is undergoing significant transformation through innovation. This innovation will drive changes across product offerings, service delivery, and operational processes.

The market is expected to attract substantial investment from both domestic and international players and will dominate the global lending framework by 2028. With a potential reach of approximately 30% of the country’s population, particularly focusing on rural areas, the Indian micro-ending market is set to play an important role in fostering rural economic growth in the coming year.

Conclusion

In conclusion, the Indian micro-lending market is composed of substantial growth, driven by innovation in financial products & services, government support and technological advancements. With increasing investments and a focus on rural areas, NBFC-MFIs are set to lead in empowering micro-enterprises and underserved communities by contributing significantly to India’s economic development and financial inclusion goals.

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