Microfinance loan sizes surge 17.5% as borrowers seek bigger credit

India's microfinance sector has witnessed a significant uptick in average loan sizes, with the typical ticket size climbing 17.5 per cent to ₹63,100 during Q2FY27, according to recent data from credit intelligence firm CRIF. The shift signals evolving borrower behaviour, with individuals seeking larger credit amounts to support business expansion and income-generating activities.

While loan disbursements grew at a more modest 5.1 per cent during the quarter, the expansion in average ticket size underscores growing confidence among microfinance borrowers despite broader economic headwinds. The increase suggests that lenders are becoming more comfortable extending larger advances to established borrowers with improved repayment track records.

However, the microfinance industry continues to contend with an overall contraction in its loan portfolio, indicating that portfolio quality concerns and market consolidation remain persistent challenges. The divergence between rising ticket sizes and shrinking portfolio volumes suggests the sector is undergoing a recalibration, with lenders focusing on fewer but larger loans rather than maintaining broad customer bases.

Analysts attribute the rise in average loan sizes to increasing competition in the sector and the need for lenders to improve yield on their assets. As borrowers graduate to larger credit requirements, microfinance institutions are repositioning themselves to serve increasingly sophisticated customer segments while managing credit risk in an evolving market landscape.