Microfinance Stress: A Warning for India's Economy

• Microfinance sector's gross loan portfolio shrinks by 17% year-on-year to Rs 3.22 lakh crore, signaling stress in vulnerable households.
• Active unique borrowers fall by 12% and loan accounts by 23% year-on-year, indicating fewer people are borrowing due to income uncertainty.
• Lenders are writing larger loans to a shrinking borrower base, with average ticket size rising to Rs 61,003, potentially increasing risk.
• Government introduces a Rs 20,000-crore credit guarantee scheme for MFIs to ease funding, transferring default risk to the government.
• Repayment stress is evident with PAR 180+ spiking to 15.27%, showing long-duration delinquencies and unresolved legacy stress among borrowers.