Indian Microfinance Sector Faces Rising Defaults Amid Economic Strain
India’s microfinance sector, which has lifted millions from poverty, faces mounting challenges as defaults rise to 6%. Economic stress, political interference, and regulatory changes create a “vicious cycle” for lenders and borrowers alike, according to industry reports.
Microfinance Crisis Threatens Poverty Alleviation Model
India’s microfinance sector, credited with lifting millions out of poverty, is facing significant strain as default rates more than double amid economic challenges. According to reports, the industry that serves approximately 60 million borrowers with $35 billion in loans now sees delinquency rates reaching 6%, compared to the traditional 95% repayment rate that characterized the sector’s successful years.