India’s microfinance sector is facing a growing challenge as loan delinquencies soared during the 2024-25 fiscal year. A recent report from Sa-Dhan, the microfinance self-regulatory body, highlights a significant jump in overdue payments, indicating increasing financial strain on borrowers.
The report reveals a sharp increase in the percentage of microfinance loans considered over 30 days past due (dpd), climbing from a manageable 2.1% in 2023-24 to a concerning 6.2% by March 2025. This rise is further underscored by the increase in loans overdue by more than 90 days – often the threshold for classifying a loan as a non-performing asset – which surged from 1.6% to 4.8% over the same period.
Among Indian states, Bihar has unfortunately emerged as the hardest hit. The state not only accounts for the largest volume of outstanding microfinance loans but also struggles with the highest default rates. Sa-Dhan’s 2025 Bharat Microfinance Report explicitly states, “Delinquency levels have risen across the industry. The Portfolio at Risk (PAR) 30+ days past due (dpd) surged to 6.2%, up significantly from 2.1% in the last financial year.” The report further solidifies this trend by adding, “State-wise data further corroborate this upward trend in delinquency across the industry.”
Specifically, Bihar’s microfinance landscape is alarming. As of March 2025, the state had a massive ₹57,712 crore in outstanding microfinance loans. A significant 7.2% of these loans were over 30 days overdue, surpassing the national average of 6.2%. More critically, 4.6% of Bihar’s loans were overdue by more than 90 days, painting a grim picture of financial stress.
The data also points to a disproportionate struggle among rural borrowers. Of the ₹2.3 lakh crore in loans held by rural customers nationwide, 6.4% were over 30 days overdue. This figure is higher than the 6.1% for semi-urban borrowers and 6% for urban borrowers, suggesting that financial difficulties are most pronounced in India’s rural areas.
Furthermore, the long-term delinquency for rural borrowers is also higher, with 3.7% of their loans being over 90 days overdue, compared to 3.2% for both semi-urban and urban borrowers. This trend highlights the urgent need for targeted interventions to support the financial stability of India’s rural microfinance clientele.