Published: 10 October 2025Economy
Microfinance Loan Defaults Surge: PAR 30+ Rises to 6.2% in FY25
Microfinance loan defaults surged sharply in FY25, with loans overdue by more than 30 days (PAR 30+) rising to 6.2% from 2.1% in FY24, while NPAs (90+ days overdue) jumped to 4.8% from 1.6% the previous year. Bihar led with ₹57,712 crore in outstanding microfinance loans with 7.2% delinquency; rural borrowers showed 6.4% delinquency rate.
The surge is attributed to over-lending, multiple loan overlaps, and rural economic stress. RBI has tightened guidelines for microfinance institutions, capping total borrower indebtedness at ₹3 lakh. Rajasthan's microfinance portfolio stood at ₹18,500 crore with a PAR 30+ of 4.8%, concentrated in Udaipur, Dungarpur, and Banswara tribal belt districts.
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Frequently asked questions
What happened to microfinance loan defaults in FY25?
**Microfinance loan defaults surged sharply in FY25, with PAR 30+ (loans overdue by 30+ days) rising to 6.2% from 2.1% in FY24,** and NPAs (90+ days overdue) jumping to 4.8% from 1.6%. The surge is attributed to over-lending, multiple loan overlaps, and rural economic stress.
What has RBI done to address microfinance defaults?
**RBI tightened guidelines for microfinance institutions, capping total borrower indebtedness at ₹3 lakh** to prevent over-lending. This regulatory action was taken in response to the surge in PAR 30+ rates from 2.1% to 6.2% in FY25 and rising NPAs in the microfinance sector.
Which state leads in microfinance outstanding loans in India?
**Bihar leads with ₹57,712 crore in outstanding microfinance loans** with a 7.2% delinquency rate. Rural borrowers overall showed a 6.4% delinquency rate. The surge in defaults is attributed to over-lending, multiple loan overlaps, and rural economic stress.
What is Rajasthan's microfinance situation?
**Rajasthan's microfinance portfolio stood at ₹18,500 crore with a PAR 30+ of 4.8%,** concentrated in Udaipur, Dungarpur, and Banswara tribal belt districts. The national PAR 30+ was 6.2% in FY25, indicating Rajasthan is below the national average but still elevated.
What is PAR 30+ in microfinance?
**PAR 30+ (Portfolio at Risk 30+)** is a key microfinance metric that measures the percentage of loans that have payments overdue by more than 30 days. In FY25, India's PAR 30+ rose sharply to **6.2% from 2.1%** in FY24, indicating a severe deterioration in microfinance loan quality.
