Microfinance loan defaults saw a dramatic increase in the 2024-25 financial year, according to a recent report from Sa-Dhan, the sector’s self-regulatory body. The percentage of these loans overdue by more than 30 days climbed sharply to 6.2%, a significant jump from just 2.1% in the preceding year, 2023-24.
This concerning trend extends to more severe delinquencies, with loans overdue by over 90 days — typically classified as non-performing assets — rising to 4.8% by March 2025, up from 1.6% the year before. Bihar emerged as the worst-performing state, holding the largest volume of outstanding microfinance loans and simultaneously recording the highest default rates.
The 2025 edition of Sa-Dhan’s annual Bharat Microfinance Report clearly states, “Delinquency levels have risen across the industry.” It further highlighted that the “Portfolio at Risk (PAR) 30+ days past due (dpd) surged to 6.2%, up significantly from 2.1% in the last financial year,” emphasizing the widespread nature of the issue.
The report elaborated, noting that “State-wise data further corroborate this upward trend in delinquency across the industry,” indicating that no region remained untouched by the rising defaults.
Specifically, Bihar’s microfinance sector recorded a staggering Rs 57,712 crore in outstanding loans by March 2025. Alarmingly, 7.2% of these loans were overdue by over 30 days, surpassing the national average of 6.2%. Furthermore, 4.6% of Bihar’s microfinance portfolio was overdue by more than 90 days, a critical indicator typically signaling a non-performing asset.
The data also underscored that rural borrowers are experiencing the most difficulty with repayments. Out of the Rs 2.3 lakh crore in loans disbursed to rural customers, a substantial 6.4% were overdue by more than 30 days. This contrasts with lower delinquency rates of 6.1% for semi-urban borrowers and 6% for urban borrowers.
The disparity is even clearer when looking at loans overdue by over 90 days, where rural borrowers accounted for 3.7% of defaults, compared to 3.2% for both semi-urban and urban borrowers.