GK and monthly revision

Microfinance shows spark but shrinks to lowest in 3 years

The Indian microfinance market has shrunk by 16% year-on-year, reaching a 3-year low of ₹3.22 lakh crore. This contraction is due to a large bank reclassifying micro loans as retail and an acceleration in writing off bad loans, despite some lenders showing improved recovery and business normalization. This development is significant as it reflects the challenges faced by the microfinance sector and its impact on financial inclusion efforts.