Report Overview

India Microfinance Market - Industry Trends & Forecast Report 2028

India Microfinance Market is predicted to grow at a CAGR of 11.3% during the forecast period (2022-2028). The rapid expansion of the market is predominantly due to the growth in the number of microfinance organizations, which aid developing regions in eliminating poverty and raising the standard of life for the underprivileged. Other reasons driving the expansion of the microfinance business include the switch from traditional lending to microfinance, lower operating costs, and reduced market risk. Moreover, a key aspect that is projected to present a significant growth opportunity for the market is the rising penetration of advanced technology, such as mobile banking, ATMs, POS, and others, in the microfinance sector across emerging regions.

 Microfinance - Overview

Microfinance is a type of financial business that offers modest loans and other financial services to low-income families. It is a financial inclusion strategy that enables poor and low-income households to escape poverty, boost their income levels, and enhance their overall living standards. It can aid in the implementation of national policies aimed at reducing poverty, empowering women, assisting disadvantaged groups, and raising living standards. Over the last two decades, the Indian microfinance sector has seen tremendous expansion in terms of both the number of institutions providing microfinance and the amount of credit made available to microfinance users.

India Microfinance Market Forecast and Trends

Growth Drivers

Switch to Microfinance from Traditional Lending

Online finance has seen substantial growth in recent years due to the increase in smartphone and internet user penetration across the country. As it offers immediate affordability for applications, microfinance is regarded as one of the practical and often used options for lenders. In recent years, numerous organizations and people have begun submitting online loan applications rather than engaging in lengthy lending procedures. To service a greater population at a cheaper cost, the microfinance sector has been able to quickly convert to a more efficient digital model thanks to the advent of new-age Fintech, according to a report by industry group MFIN and KPMG. Furthermore, the convenience with which borrowers can apply for loans, as well as various other benefits for lenders such as automated loan management and speedy approval, are boosting market expansion.

Adoption of Cutting-Edge Technology in Microfinance

The increased usage of digital technology in the microfinance sector to provide new channels for people and increase their revenue opportunities supports market growth. Furthermore, increased connectivity in developing regions, as well as technology advances in certain areas, are likely to give attractive opportunities for market expansion. Furthermore, in emerging regions, there is a high penetration of advanced technology in the microfinance industry, such as mobile banking, ATMs, POS, and others, which provides future opportunities for the market. For instance, the Indian government has devised several financial aid programs for existing and prospective MSMEs. These initiatives aim to provide financial assistance to aspiring MSMEs so that they can establish and/or flourish to their maximum potential. Furthermore, prominent market players are bringing new technology to increase their market share and provide customers with a better experience, which is projected to provide future opportunities for the industry.

Restraints

Microfinance Charge High Interest on Small Amounts

The main obstacle to the market's expansion is the high-interest rates that microfinance institutions and microlenders charge for a range of different loan amounts. Additionally, microfinance focuses primarily on expanding its revenue, which results in a short repayment period and excessive fees. Due to their substantial borrowing from banks and other institutions, microfinance institutions have to charge high-interest rates and have short repayment terms, which restricts the market's expansion. Additionally, because traditional microfinance banks are permitted to collect savings as a means of funding loans that have a detrimental influence on market growth, many microfinance institutions across the nation must employ private equity to obtain money. Additionally, tighter government regulations on microfinance institutions are impeding industry expansion.

Impact of COVID-19 on India Microfinance Market

The COVID-19 pandemic has had a moderate influence on the microfinance industry, as the epidemic has made lending activities, such as past-due or non-collectible loans, an implicit element of the financial sector. Furthermore, the government has shut down some microfinance institutions due to an increase in the number of patients nationwide. Furthermore, the government provided several alternative digital platforms for microfinance companies to advertise their products and recruit customers, which has a beneficial impact on market growth. As a result, amid the health crisis, this has become one of the primary growth causes for the microfinance sector.

India Microfinance Market - By Type

Based on the type, the India Microfinance Market is segmented into Bank and Non-Bank. Among these, bank accounts for the largest share in the Microfinance Market. This is because preferred sources of microfinance in India are banks. Also, they'll probably keep doing so in the years to come as well. This is because banks provide more enticing interest rates than non-banking institutions. All these factors propel the growth of the India Microfinance Market during a forecast period (2022-2028).

India Microfinance Market – By Bank Type

Based on bank type, the India Microfinance Market is segmented into Small Finance Companies, Commercial Banks, Regional Rural Banks, and Cooperative Banks. Small Finance Companies held the largest market share in FY 2020, followed by Commercial Banks and Rural Rural Banks. Small Finance companies meet the financial needs of individuals and businesses on a smaller scale. They mostly assist the impoverished who do not have access to regular banking and financial services. As a result, a Small Finance Company serves as a bank for the poor. All these factors boost the growth of the India Microfinance Market during the forecast period (2022-2028).

India Microfinance Market - By Non-Bank Type

Based on non-bank type, the India Microfinance Market is segmented into NBFC-MFIs, NBFCs, and Not For Profit MFIs. The NBFCs segment now has the biggest market share and is likely to continue to do so during the forecast period (2022-2028). Non-Banking Financial Company (NBFC) is a company registered in India under the Companies Act, 1956, engaged in the business of loans and advances, acquisition of shares, stock, bonds, hire-purchase insurance business, or chit-fund business, but excludes any institution whose primary business is agriculture, industrial activity, purchase or sale of any goods (other than securities), or providing any services, and sale/purchase/construction of immovable property. This influences the NBFCs segment to dominate the market share in the upcoming years.

India Microfinance Market - By Area

Based on the area, the India Microfinance Market is segmented into Urban and Rural. Among these, rural area dominates the market share. The primary goal of microfinance institutions is to allow low-income borrowers to achieve financial independence. Through the provision of credit to borrowers who fall under the BPL (Below Poverty Line) category, this sector contributes significantly to the promotion of inclusive growth. This industry also assists rural women in obtaining small loans at reasonable interest rates to support their livelihood.

Competitive Landscape

The leading market players in the India Microfinance Market are Jana Small Finance Bank, Belstar Investment and Finance Private Limited, Ujjivan Small Finance Bank Limited, Satin Creditcare Network Limited, Annapurna Microfinance Pvt Ltd, BSS Microfinance Pvt Ltd, Fusion Microfinance, Future Financial Services Private Limited, Asirvad Microfinance Pvt Ltd, and other prominent players.

The India Microfinance Market is highly fragmented with the presence of several manufacturing companies in the country. The market leaders retain their supremacy by spending on research and development, incorporating cutting-edge technology into their goods, and releasing upgraded items for customers. Various tactics, including strategic alliances, agreements, mergers, and partnerships, are used.

Scope of the Report

By Type

• Bank

• Non-Bank

By Bank Type

• Small Finance Companies

• Commercial Banks

• Regional Rural Banks

• Cooperative Banks

By Non-Bank Type

• NBFC-MFIs

• NBFCs

• Not For Profit MFIs

By Area

• Urban

• Rural

By End-Use

• Agricultural and Allied Services

• Services

• Trade & Business

• Education

• Production

• Others

1. Research Framework
   1. Research Objective
   2. Product Overview
   3. Market Segmentation
2. Research Methodology
   1. Qualitative Research
      1. Primary & Secondary Research
   2. Quantitative Research
   3. Market Breakdown & Data Triangulation
      1. Secondary Research
      2. Primary Research
   4. Breakdown of Primary Research Respondents, By Region
   5. Assumption & Limitation
3. Executive Summary
4. India Microfinance Market Insights
   1. Industry Value Chain Analysis
   2. DROC Analysis
      1. Growth Drivers
      2. Restraints
      3. Opportunities
      4. Challenges
   3. Technological Landscape/Recent Development
   4. Regulatory Framework
   5. Porter’s Five Forces Analysis
      1. Bargaining Power of Suppliers
      2. Bargaining Power of Buyers
      3. Threat of New Entrants
      4. Threat of Substitutes
      5. Intensity of Rivalry
5. India Microfinance Market Overview
   1. Market Size & Forecast by Value, 2018-2028
      1. By Value (USD Million)
      2. By Volume (Thousand Units)
   2. Market Share & Forecast
      1. By Type
         1. Bank
         2. Non-Bank
      2. By Bank Type
         1. Small Finance Companies
         2. Commercial Banks
         3. Regional Rural Banks
         4. Cooperative Banks
      3. By Non-Bank Type
         1. NBFC-MFIs
         2. NBFCs
         3. Not For Profit MFIs
      4. By Area
         1. Urban
         2. Rural
      5. By End-Use
         1. Agricultural and Allied Services
         2. Services
         3. Trade & Business
         4. Education
         5. Production
         6. Others
6. Competitive Landscape
   1. List of Key Players and Their Offerings
   2. Market Share Analysis, 2021
   3. Competitive Benchmarking, By Operating Parameters
   4. Key Strategic Development (Merger, Acquisition, Partnership, etc.)
7. Impact of Covid-19 on India Microfinance Market
8. Company Profile (Company Overview, Financial Matrix, Competitive Landscape, Key Personnel, Key Competitors, Contact Address, and Strategic Outlook) **
   1. Jana Small Finance Bank
   2. Belstar Investment and Finance Private Limited
   3. Ujjivan Small Finance Bank Limited
   4. Satin Creditcare Network Limited
   5. Annapurna Microfinance Pvt Ltd
   6. BSS Microfinance Pvt Ltd
   7. Fusion Microfinance
   8. Future Financial Services Private Limited
   9. Asirvad Microfinance Pvt Ltd
   10. Other prominent players

9. Key Strategic Recommendations

*Financial information in case of non-listed companies will be provided as per availability

**The segmentation and the companies are subjected to modifications based on the in-depth secondary for the final deliverable

List of Figures

Figure 1        India Microfinance Market Segmentation

Figure 2        India Microfinance Market Value Chain Analysis

Figure 3        Company Market Share Analysis, 2021

Figure 4        India Microfinance Market Size, By Value (USD Million), 2018-2028

Figure 5        India Microfinance Market Share, By Type, By Value, 2018-2028

Figure 6        India Microfinance Market Share, By Bank Type, By Value, 2018-2028

Figure 7        India Microfinance Market Share, By Non-Bank Type, By Value, 2018-2028

Figure 8        India Microfinance Market Share, By Area, By Value, 2018-2028

Figure 9        India Microfinance Market Share, By End-User, By Value, 2018-2028

List of Tables

Table 1         India Microfinance Market Size, By Type, By Value, 2018-2028

Table 2         India Microfinance Market Size, By Bank Type, By Value, 2018-2028

Table 3         India Microfinance Market Size, By Non-Bank Type, By Value, 2018-2028

Table 4         India Microfinance Market Size, By Area, By Value, 2018-2028

Table 5         India Microfinance Market Size, By End-User, By Value, 2018-2028

Table 6         Jana Small Finance Bank Company Overview

Table 7         Jana Small Finance Bank Financial Overview

Table 8         Belstar Investment and Finance Private Limited Company Overview

Table 9         Belstar Investment and Finance Private Limited Financial Overview

Table 10        Ujjivan Small Finance Bank Limited Company Overview

Table 11        Ujjivan Small Finance Bank Limited Financial Overview

Table 12        Satin Creditcare Network Limited Company Overview

Table 13        Satin Creditcare Network Limited Financial Overview

Table 14        Annapurna Microfinance Pvt Ltd Company Overview

Table 15        Annapurna Microfinance Pvt Ltd Financial Overview

Table 16        BSS Microfinance Pvt Ltd Company Overview

Table 17        BSS Microfinance Pvt Ltd Financial Overview

Table 18        Fusion Microfinance Company Overview

Table 19        Fusion Microfinance Financial Overview

Table 20        Future Financial Services Private Limited Company Overview

Table 21        Future Financial Services Private Limited Financial Overview

Table 22        Asirvad Microfinance Pvt Ltd Company Overview

Table 23        Asirvad Microfinance Pvt Ltd Financial Overview