Financial inclusion means that every adult can open an account, save, borrow, insure and pay at a fair price. Microfinance is the lending end of it: small, collateral-free loans to low-income households, usually women, often given through groups. This part covers both. It explains the three ways microcredit reaches a borrower (self-help groups linked to banks, joint liability groups and microfinance institutions), the RBI rules that have governed the sector since 2022, and how a boom in 2023-24 turned into seven quarters of contraction before recovering in 2026. It then turns to the inclusion side: Jan Dhan accounts, the JAM trinity, the three Jan Suraksha schemes, the RBI's Financial Inclusion Index and the World Bank's Global Findex.
This part builds on Part 18, RBI regulation of banks and NBFCs, which covers scale-based regulation and the net owned fund rules for NBFCs. For the institutions themselves, see Part 31, NBFCs, and Part 33, small finance and payments banks. Bank lending to MFIs and SHGs counts towards priority sector lending (Part 35).
In the news
- 1 September 2026: microfinance growth holds in Q1. MFIN's 58th Micrometer put the industry portfolio at ₹3,28,708 crore on 30 June 2026, up 1.1% on the quarter but down 6.9% on the year. PAR 31–180 fell to 1.6% from 5.6% a year earlier. NBFC-MFIs held 44.3% of the portfolio and banks 25.3%. MFIN has asked the RBI to review the ₹3 lakh household income limit, which has not changed since 2022. Why it matters for the exam: expect the portfolio size, the lender shares and the ₹3 lakh limit.
- September 2026: SIDBI–Equifax Microfinance Pulse. The 28th edition found that 30+ day delinquency had fallen from 6.08% in June 2025 to 1.89% in June 2026. Lenders are moving to larger loans: loans above ₹75,000 rose from 28% to 41% of disbursements in a year. Why it matters for the exam: it confirms that the 2024-25 stress has largely passed.
- 27 August 2026: Jan Dhan turns 12. PIB reported 59.09 crore PMJDY accounts on 19 August 2026, with 32.92 crore (about 56%) held by women and deposits of ₹3,16,514 crore, up from ₹15,670 crore in March 2015. Why it matters for the exam: PMJDY numbers are asked every year around the anniversary on 28 August.
- 16 July 2026: Financial Inclusion Index reaches 70.0. The RBI's FI-Index for March 2026 rose to 70.0 from 67.0 a year earlier, with growth in all sub-indices, led by usage. Why it matters for the exam: the latest value and what drove it are standard questions.
- 12 June 2026: microfinance turns the corner. MFIN's Micrometer for March 2026 showed the portfolio growing again (by over 3% in the quarter, to ₹3,25,174 crore) after seven quarters of contraction. PAR 31–180 was 2.0% against 6.3% a year before. Why it matters for the exam: it marks the end of the 2024–26 downturn.
- 2 April 2026: MFIN–NCAER borrower study. A survey of 10,342 borrowers found that only 1% of microfinance borrowers now also borrow informally, against 46% of loans in a 2011 study. The average fixed-obligation-to-income ratio was 18.7%, well inside the RBI's 50% cap. Why it matters for the exam: it is evidence that regulated microfinance is pushing out moneylenders.
- 26 February 2026: Bihar passes a microfinance bill. The Bihar Legislative Assembly adopted a bill to regulate money lending and prevent coercive recovery. MFIN said its registration rules do not apply to RBI-regulated lenders, which serve nearly 1 crore clients in Bihar with ₹48,569 crore of loans. Why it matters for the exam: it echoes Andhra Pradesh in 2010, when a state law froze the sector.
- 1 December 2025: NSFI 2025-30 launched. Governor Sanjay Malhotra unveiled the National Strategy for Financial Inclusion 2025-30, which has five objectives called the "Panch-Jyoti" and 47 action points. Why it matters for the exam: it succeeds NSFI 2019-24, and the "Panch-Jyoti" name is quotable.
What microfinance is
The RBI definition
Since 1 April 2022 the RBI has used one definition for every lender. A microfinance loan is a collateral-free loan to a household with an annual income of up to ₹3,00,000. A household means husband, wife and their unmarried children. The loan's purpose and how it is delivered (in person or digitally) do not matter. If the household earns ₹3 lakh or less and the loan is unsecured, it is microfinance, whether a bank, a small finance bank (SFB), an NBFC-MFI or another NBFC makes it.
The definition comes from the Master Direction – Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022, issued on 14 March 2022. In the consolidation of 28 November 2025 its rules were carried into the new entity-wise directions, among them the Reserve Bank of India (Non-Banking Financial Companies – Microfinance Institution) Directions, 2025.
Why microfinance exists
A poor household has no collateral, no credit history and needs loans too small for a bank branch to process profitably. Before formal microfinance, it borrowed from moneylenders. The MFIN–NCAER study of April 2026 found informal lenders charging annual rates of 97% to 178%. Microfinance solves the information problem with groups and the cost problem with standard products and frequent repayments, collected in the village.
The three models
SHG–Bank Linkage Programme (SHG-BLP)
The SHG-Bank Linkage Model was pioneered by NABARD in 1992. Women in a village form a self-help group, save regularly and lend their pooled savings among themselves. Once the group has shown discipline, a bank opens a savings account for it and then lends to the group, which on-lends to members. Repayment rests on peer pressure and the group's own savings.
- Who promotes SHGs: NGOs, banks and government missions such as the Deendayal Antyodaya Yojana–National Rural Livelihoods Mission (DAY-NRLM). NABARD provides grants, training and refinance.
- Who lends: commercial banks, RRBs and co-operative banks.
- Character: savings-led, slower, and built around the group as an institution.
Joint liability groups (JLGs)
A joint liability group is a small group of borrowers, usually women, who take individual loans but guarantee each other. In the Malegam Committee's words, the loans are "jointly and severally guaranteed by the other members of the group". There is no compulsory saving first. JLGs are the main way that NBFC-MFIs, SFBs and banks lend directly, and NABARD also promotes them through banks.
Microfinance institutions (MFIs)
"MFI" is a broad term for any organisation whose main business is microfinance. The RBI-regulated ones are:
| Lender | Regulated as | Notes |
|---|---|---|
| NBFC-MFI | NBFC under Chapter III-B of the RBI Act | Must keep at least 60% of total assets (net of intangibles) in microfinance loans |
| Other NBFCs | NBFC | Microfinance capped at 25% of total assets (earlier 10%) |
| Small finance banks | Bank | Several began life as NBFC-MFIs |
| Banks | Bank | Lend directly, through business correspondents, and to SHGs |
Non-profit MFIs (trusts, societies and Section 8 companies) are a small and shrinking part of the market.
How the models compare
| SHG-BLP | JLG through an MFI | |
|---|---|---|
| Borrower | The group | Each member |
| Saving first | Yes | No |
| Guarantee | Group savings and peer pressure | Mutual guarantee of members |
| Main lenders | Banks, RRBs, co-operative banks | NBFC-MFIs, SFBs, banks, NBFCs |
| Promoter | NABARD (1992), NGOs, NRLM | The lender itself |
| Repayment | Monthly, to the bank | Weekly, fortnightly or monthly, collected in the village |
From the Andhra Pradesh crisis to the 2022 framework
The 2010 crisis
By 2010 NBFC-MFIs were growing fast. The Malegam Committee later listed the concerns: high and opaque interest rates, multiple lending, over-borrowing, ghost borrowers and coercive recovery. On 15 October 2010 Andhra Pradesh issued an ordinance regulating MFIs. The AP Micro Finance Institutions (Regulation of Money Lending) Act replaced it on 14 December 2010. MFIs had to register in each district, could not take collateral and had to collect repayments at the gram panchayat office or another public place. Recovery agents and coercive methods were banned, and total interest could not exceed the principal.
The Malegam Committee
The RBI's Central Board set up a sub-committee under Y. H. Malegam on the same day, 15 October 2010. Its report of 19 January 2011 recommended:
- a separate NBFC-MFI category regulated by the RBI;
- household income of up to ₹50,000 and loans of up to ₹25,000;
- a margin cap of 10% over the cost of funds for large MFIs and 12% for small ones, and a 24% cap on individual loans;
- no more than two MFIs lending to the same borrower.
The 2011 NBFC-MFI regime
The RBI's directions of 2 December 2011 created the NBFC-MFI category. Their main rules:
- at least 85% of net assets in qualifying loans;
- household income limits of ₹60,000 (rural) and ₹1,20,000 (urban);
- loans of up to ₹35,000 in the first cycle, and total debt of up to ₹50,000;
- a 12% margin cap and a 26% interest cap;
- no more than two NBFC-MFIs lending to one borrower.
The weakness was that these rules applied only to NBFC-MFIs. Banks, SFBs and other NBFCs lent to the same households without income limits or price caps.
The 2022 framework
The Regulatory Framework for Microfinance Loans (14 March 2022, effective 1 April 2022) made the rules activity-based rather than entity-based:
| Rule | 2011 regime (NBFC-MFIs only) | 2022 framework (all lenders) |
|---|---|---|
| Household income limit | ₹60,000 rural, ₹1,20,000 urban | ₹3,00,000, all areas |
| Debt limit | ₹50,000 total, at most 2 NBFC-MFIs | Repayments up to 50% of monthly household income |
| Pricing | Margin cap 12%, interest cap 26% | No cap; a board-approved pricing policy |
| Qualifying assets (NBFC-MFI) | 85% of net assets | 75% of total assets (March 2022), now 60% (June 2025) |
| Other NBFCs | Microfinance up to 10% of assets | Now up to 25% |
The other rules for all lenders:
- No collateral. The loan cannot be tied to a lien on the borrower's deposit account.
- No prepayment penalty. Late-payment penalties apply only to the overdue amount.
- Pricing. Each lender must have a board-approved policy covering its interest rate model, the components of the rate, the range of spreads and a ceiling on interest and charges. The RBI does not set the ceiling; it can act if rates are usurious.
- Recovery conduct. Recovery takes place at an agreed place. Staff may visit a home or workplace only after the borrower has missed two or more agreed meetings. Abusive language, calls before 9 a.m. or after 6 p.m. and harassment of relatives are banned, and recovery agents need police verification.
Worked example: the 50% cap
The Devi household earns ₹2,40,000 a year (₹20,000 a month), so it is within the ₹3 lakh limit. It already pays a ₹4,000 monthly EMI on a two-wheeler loan. Secured loans count towards the cap.
- Cap on monthly repayments: 50% × ₹20,000 = ₹10,000.
- Headroom: ₹10,000 − ₹4,000 = ₹6,000 a month.
- At 24% a year on a reducing balance over 24 months, ₹1 of EMI supports about ₹18.91 of loan. ₹6,000 of headroom therefore supports a new loan of about ₹1,13,500.
If the household earned ₹3,20,000 a year, a new unsecured loan would not be a microfinance loan at all.
Worked example: what a microloan costs
A borrower takes ₹40,000 at 24% a year on a reducing balance, repaid monthly over 24 months.
- Monthly rate r = 24% ÷ 12 = 2%.
- EMI = 40,000 × 0.02 ÷ (1 − 1.02^−24) = 800 ÷ 0.3783 ≈ ₹2,115.
- Total repaid = 24 × 2,115 ≈ ₹50,756, so interest ≈ ₹10,756.
At the informal rates quoted by MFIN–NCAER (97% or more), the same loan would cost several times as much.
Size of the sector, and the 2024–26 slump
Who lends
MFIN's Micrometer, based on CRIF High Mark bureau data, is the standard measure of the market. On 30 June 2026 it put the portfolio at ₹3,28,708 crore across 36 states and UTs and 718 districts. NBFC-MFIs were the largest lenders with 44.3%, followed by banks with 25.3%. SFBs and other NBFCs held the rest.
SIDBI and Equifax publish a second measure, the Microfinance Pulse, from Equifax bureau data. It counts a smaller portfolio (₹2.69 lakh crore on 30 June 2026), but it gives the full split by lender type.
| Lender, 30 June 2026 | Portfolio (₹ crore) | Share | 30+ delinquency |
|---|---|---|---|
| NBFC-MFIs | 1,25,661 | 46.7% | 1.67% |
| Banks | 59,030 | 21.9% | 2.09% |
| NBFCs | 44,407 | 16.5% | 1.79% |
| SFBs | 35,804 | 13.3% | 1.98% |
| Not-for-profit MFIs and others | 4,372 | 1.6% | 6.11% |
| Total | 2,69,274 | 100% | 1.89% |
Source: SIDBI–Equifax Microfinance Pulse, Vol. XXVIII (September 2026). Shares calculated from the portfolio figures.
Both sources agree on the direction. Banks have lost share, and NBFC-MFIs have gained it. In March 2024, MFIN put banks at 33.2% and NBFC-MFIs at 39.4%. Part of the banks' fall is a reclassification: some banks moved loans out of the microfinance bureau into retail credit bureaus, which MFIN has raised with the RBI.
The boom, the bust and the recovery
| Date | Portfolio (₹ crore, MFIN) | Change |
|---|---|---|
| 31 March 2023 | 3,48,339 | |
| 31 March 2024 | 4,33,697 (peak) | +24.5% YoY |
| 30 June 2024 | 4,24,444 | First quarterly fall |
| 30 September 2024 | 4,08,049 | |
| 31 March 2025 | 3,75,030 | −13.5% YoY |
| 30 September 2025 | 3,39,510 | −16.8% YoY |
| 31 December 2025 | 3,14,728 | Trough |
| 31 March 2026 | 3,25,174 | First rise in eight quarters |
| 30 June 2026 | 3,28,708 | +1.1% QoQ, −6.9% YoY |
From the March 2024 peak to the December 2025 trough the portfolio shrank by about 27% (3,14,728 ÷ 4,33,697 − 1 = −27.4%). The causes MFIN gives for 2024-25:
- Over-leveraging. The 2022 framework dropped the old two-lender limit, and concern grew that some borrowers had taken on too many loans.
- Shocks to repayment: the 2024 heatwave, "external incitement" not to repay, and the Karnataka issue.
- A funding squeeze. As defaults rose, banks cut lending to small and medium MFIs. MFIN estimates that about 50 lakh clients lost access to formal credit.
PAR 31–180 rose to 6.3% in March 2025, then fell to 2.0% in March 2026 and 1.6% in June 2026. Policy helped the recovery. In February 2025 the RBI cut the risk weight on banks' microfinance loans that qualify as regulatory retail to 75% (see the RBI and financial stability). In June 2025 it cut the NBFC-MFI qualifying-asset requirement to 60%. The government's credit guarantee scheme for MFIs (CGSMFI 2.0), which MFIN says was extended to August 2026, also helped.
SRO guardrails
MFIN, the industry body of NBFC-MFIs, banks, SFBs and NBFCs, describes itself as India's first RBI-recognised self-regulatory organisation (SRO). Because the 2022 framework is principles-based, MFIN uses binding "guardrails" to fill the gaps:
- 8 July 2024: at most four microfinance lenders per borrower, and total microfinance debt of at most ₹2 lakh.
- 25 November 2024, tightened:
- at most three lenders per borrower;
- the ₹2 lakh limit now includes unsecured retail loans, not only microfinance;
- no new loan to a borrower more than 60 days overdue on more than ₹3,000 (the earlier test was 90 days);
- apart from the processing fee and credit life insurance, no charges may be deducted from the loan amount.
Worked example: the guardrail test
Sunita's household earns ₹2,70,000 a year. She owes ₹1,20,000 to two NBFC-MFIs and ₹50,000 on an unsecured personal loan from a bank, and is current on all of them. A third MFI wants to lend her ₹40,000.
- Income: ₹2,70,000 ≤ ₹3,00,000, so this is a microfinance loan.
- Lenders: this would be her third microfinance lender, which is allowed.
- Total unsecured debt after the loan: 1,20,000 + 50,000 + 40,000 = ₹2,10,000, which is over ₹2 lakh. Under the November 2024 guardrail the MFI can lend at most ₹30,000.
The ₹2 lakh test failed only because the guardrail now counts the bank's retail loan. Under the July 2024 version it would have passed.
Financial inclusion
PM Jan Dhan Yojana (PMJDY)
The Pradhan Mantri Jan Dhan Yojana was announced on 15 August 2014 and launched on 28 August 2014 as the National Mission for Financial Inclusion. It gives every unbanked adult a basic savings bank deposit account with:
- no minimum balance and no account-opening or maintenance charges;
- a free RuPay debit card with accident cover of ₹2 lakh (₹1 lakh for accounts opened before the scheme's extension in August 2018);
- an overdraft of up to ₹10,000 for one account holder per household, after six months of satisfactory operation;
- eligibility for DBT, PMJJBY, PMSBY, APY and MUDRA loans.
In 2018 the focus moved from "every household" to "every unbanked adult". In January 2015 Guinness World Records recognised 1,80,96,130 accounts opened in a single week.
| Date | Accounts (crore) | Deposits (₹ crore) |
|---|---|---|
| March 2015 | 14.72 | 15,670 |
| 18 August 2021 | 43.04 | 1,46,230 |
| 10 August 2022 | 46.25 | 1,73,954 |
| 16 August 2023 | 50.09 | 2,03,505 |
| 14 August 2024 | 53.13 | 2,31,236 |
| 13 August 2025 | 56.16 | 2,67,756 |
| 19 August 2026 | 59.09 | 3,16,514 |
| 14 October 2026 | 59.59 | 3,24,069 |
Who holds the accounts on 14 October 2026: 46.27 crore are rural or semi-urban (78%), and 33.23 crore belong to women (56%). By bank group, public sector banks hold 45.84 crore, RRBs 11.18 crore and private banks only 2.38 crore.
Worked example: average balance
On 14 October 2026: ₹3,24,069 crore ÷ 59.59 crore accounts = ₹5,438 per account. PIB put it at ₹5,356 on 19 August 2026 and ₹4,352 on 14 August 2024, a rise of about 25% in two years. A rising average balance is the government's main evidence that accounts are being used, not just opened.
The JAM trinity
JAM stands for Jan Dhan, Aadhaar and Mobile. Each account holder links three things with consent: a bank account (the Jan Dhan account), a biometric identity (Aadhaar) and a mobile number. Together they let the government pay benefits straight into the right person's account, through Direct Benefit Transfer (DBT), without middlemen. PIB calls this a "diversion-proof subsidy delivery mechanism". In 2024-25, ₹6.9 lakh crore was credited to bank accounts under DBT schemes. During the 2020 lockdown, ₹30,945 crore was credited to women's Jan Dhan accounts under the PM Garib Kalyan Yojana.
The Jan Suraksha schemes
All three were launched on 9 May 2015 and are taken through a bank or post office account by auto-debit.
| Scheme | Cover | Age | Premium or contribution | Enrolment (April 2025) |
|---|---|---|---|---|
| PMJJBY (life) | ₹2 lakh on death from any cause | 18–50 | ₹436 a year | 23.63 crore cumulative |
| PMSBY (accident) | ₹2 lakh for death or total disability; ₹1 lakh for partial disability | 18–70 | ₹20 a year | 51.06 crore cumulative |
| APY (pension) | Guaranteed pension of ₹1,000–₹5,000 a month from age 60 | 18–40, not income-tax payers | Depends on age and pension chosen | 7.66 crore subscribers |
PMJJBY and PMSBY run for one year from 1 June to 31 May. PMJJBY is offered through LIC and other life insurers, PMSBY through general insurers. APY is administered by PFRDA within the National Pension System. By April 2025, PMJJBY had paid ₹18,398 crore on about 9.2 lakh claims, and PMSBY ₹3,121 crore on 1.57 lakh claims.
The RBI's Financial Inclusion Index
The FI-Index measures financial inclusion on a scale of 0 to 100. It was first published in August 2021, for the year ending March 2021, and is updated every July. It has no base year. It covers banking, investments, insurance, postal services and pensions, and combines three sub-indices:
- Access (35%): whether services are within reach;
- Usage (45%): whether people actually use them;
- Quality (20%): how good and fair the services are.
| End-March | FI-Index |
|---|---|
| 2017 | 43.4 |
| 2021 | 53.9 |
| 2022 | 56.4 |
| 2023 | 60.1 |
| 2024 | 64.2 |
| 2025 | 67.0 |
| 2026 | 70.0 |
Worked example. From 53.9 (2021) to 70.0 (2026) is a rise of 16.1 points, or 29.9%. The compound annual growth rate is (70.0 ÷ 53.9)^(1/5) − 1 ≈ 5.4% a year. From 2017 to 2021 it was 5.5%. Usage has always been the weakest sub-index: in March 2021 it was 43.0, against 73.3 for access.
National strategies
- NSFI 2019-24 was released in January 2020. Its milestones included a banking outlet within 5 km of every village (or hamlet of 500 households in hilly areas). By 31 March 2025 this was fully met in 27 states and 8 UTs, covering 99.99% of identified villages.
- NSFI 2025-30, approved by the FSDC Sub-Committee, was unveiled on 1 December 2025. Its five objectives, the "Panch-Jyoti", have 47 action points spread across the RBI, SEBI, IRDAI, PFRDA, NABARD, NSDC and NCFE:
- fair, suitable and affordable financial services that are available and used;
- a gender-sensitive approach, with strategies for vulnerable groups;
- links between livelihoods, skills and financial inclusion;
- financial education for financial discipline;
- stronger customer protection and grievance redress.
The supporting network has grown too. In December 2025 there were 1,70,189 bank branches (57,319 of them rural), about 11.75 lakh fixed-point BC outlets and 7,304 lakh basic savings bank deposit accounts (BSBDAs) holding ₹3,45,477 crore. PMJDY accounts are a subset of BSBDAs.
Global Findex 2025
The World Bank's Global Findex 2025, released in July 2025 and based on 2024 surveys, found that 89% of Indian adults had an account, up from 35% in 2011, 53% in 2014, 80% in 2017 and 78% in 2021. The world average was 79%. India has no gender gap in account ownership: about 89% for both women and men. The weak spot is use. Findex found that 16% of Indian account owners had no active account, against 4% in other low- and middle-income economies.
Common exam traps
The ₹3 lakh limit is household income, not individual income or a loan limit. There is no loan-size cap; the limit on debt comes from the 50% repayment rule.
Pricing is not capped by the RBI any more. The 26% cap and 12% margin cap belonged to the 2011 NBFC-MFI regime and ended with the 2022 framework. Lenders set their own ceiling through a board-approved policy.
SHGs borrow as a group; JLG members borrow individually. SHG-BLP is savings-led and was pioneered by NABARD in 1992.
Qualifying assets: 85% → 75% → 60%. The current NBFC-MFI requirement is 60% of total assets net of intangibles (June 2025).
The guardrails are MFIN's, not the RBI's. The three-lender and ₹2 lakh limits are SRO rules. The RBI's own limit is the 50% of income test.
FI-Index ≠ Findex. The FI-Index (RBI, 0–100) was 70.0 for March 2026. Findex (World Bank) measures the percentage of adults with an account: 89% for India in 2024.
PMJDY accident cover is ₹2 lakh only for accounts opened after August 2018; older accounts have ₹1 lakh. The overdraft is ₹10,000.
Key facts at a glance
| Microfinance loan | Collateral-free loan to a household earning up to ₹3 lakh a year |
| Repayment cap | 50% of monthly household income (all loans, secured included) |
| RBI framework | Master Direction of 14 March 2022, effective 1 April 2022 |
| NBFC-MFI qualifying assets | At least 60% of total assets net of intangibles (6 June 2025) |
| Other NBFCs | Microfinance up to 25% of total assets |
| NBFC-MFI NOF | ₹10 crore by 31 March 2027 |
| Malegam Committee | Formed 15 October 2010; report 19 January 2011 |
| NBFC-MFI category | Directions of 2 December 2011 (26% interest cap, 12% margin cap) |
| SHG-BLP | Pioneered by NABARD in 1992 |
| Industry portfolio (MFIN) | ₹3,28,708 crore on 30 June 2026; peak ₹4,33,697 crore in March 2024 |
| Largest lender type | NBFC-MFIs, 44.3% (MFIN, June 2026) |
| MFIN guardrails | Up to 3 lenders; ₹2 lakh total including unsecured retail (November 2024) |
| PMJDY | Launched 28 August 2014; 59.59 crore accounts, ₹3.24 lakh crore (14 October 2026) |
| PMJDY benefits | Zero balance, RuPay card with ₹2 lakh accident cover, ₹10,000 overdraft |
| Jan Suraksha | PMJJBY ₹436, PMSBY ₹20 a year; APY ₹1,000–5,000 pension; all launched 9 May 2015 |
| FI-Index | 70.0 (March 2026); weights: Access 35, Usage 45, Quality 20 |
| NSFI 2025-30 | Unveiled 1 December 2025; "Panch-Jyoti", 47 action points |
| Global Findex 2025 | India 89% of adults with an account; world 79% |
Exam corner: what to remember
- The 2022 framework made microfinance rules activity-based: the same rules apply to banks, SFBs, NBFC-MFIs and NBFCs.
- The three numbers are ₹3 lakh household income, a 50% repayment cap and no collateral. There is no RBI interest cap; pricing is set by a board-approved policy.
- NBFC-MFI qualifying assets: 85% (2011) → 75% (2022) → 60% (June 2025).
- AP crisis: ordinance on 15 October 2010; the Malegam Committee reported on 19 January 2011; the NBFC-MFI category followed on 2 December 2011.
- Portfolio: peak ₹4.34 lakh crore (March 2024), trough ₹3.15 lakh crore (December 2025), now ₹3.29 lakh crore (June 2026). NBFC-MFIs are the largest lenders.
- MFIN guardrails: 3 lenders, ₹2 lakh, no loans to 60+ DPD borrowers with more than ₹3,000 overdue.
- PMJDY: 59.09 crore accounts and ₹3.17 lakh crore deposits on its 12th anniversary; about 56% women and 78% rural or semi-urban.
- JAM = Jan Dhan + Aadhaar + Mobile, the pipeline for DBT (₹6.9 lakh crore in 2024-25).
- FI-Index 70.0 for March 2026 (published 16 July 2026). NSFI 2025-30 follows NSFI 2019-24.
- Findex 2025: 89% of Indian adults have an account, and there is no gender gap.
For exam-specific syllabus and pattern details, see our pages for RBI Grade B, SBI PO and IBPS PO.
Test yourself
Under the RBI's 2022 microfinance framework, a microfinance loan is a collateral-free loan to a household whose annual income does not exceed:
Show answer
Answer: (d) The limit is ₹3,00,000 of household income, for rural and urban borrowers alike.
The SHG–Bank Linkage Programme was pioneered in 1992 by:
Show answer
Answer: (b) NABARD pioneered SHG-BLP in 1992; SIDBI was a major refinancer of MFIs.
A household earns ₹2,16,000 a year and already pays EMIs of ₹3,500 a month. Under the RBI's 50% rule, the maximum additional monthly repayment it can take on is:
Show answer
Answer: (a) Monthly income is ₹18,000; 50% is ₹9,000; ₹9,000 − ₹3,500 = ₹5,500.
Since June 2025, the minimum share of qualifying (microfinance) assets that an NBFC-MFI must hold is:
Show answer
Answer: (c) The RBI circular of 6 June 2025 cut the requirement from 75% to 60%.
The committee set up by the RBI's Central Board after the 2010 Andhra Pradesh microfinance crisis was headed by:
Show answer
Answer: (a) The Malegam Committee reported in January 2011 and recommended the NBFC-MFI category.
According to MFIN's Micrometer, the microfinance industry portfolio on 30 June 2026 was about:
Show answer
Answer: (b) ₹3,28,708 crore. ₹2.69 lakh crore is the SIDBI–Equifax measure, and ₹4.34 lakh crore was the March 2024 peak.
Under MFIN's guardrails of November 2024, the maximum number of microfinance lenders to a single borrower is:
Show answer
Answer: (b) It was cut from four (July 2024) to three, and the ₹2 lakh debt limit now includes unsecured retail loans.
The RBI's Financial Inclusion Index for March 2026, released on 16 July 2026, stood at:
Show answer
Answer: (c) It was 70.0, up from 67.0 in March 2025, with usage the main driver.
On 14 October 2026, PMJDY accounts held deposits of ₹3,24,069 crore across 59.59 crore accounts. The average balance per account was closest to:
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Answer: (b) 3,24,069 ÷ 59.59 ≈ ₹5,438.
Which scheme offers a ₹2 lakh accident cover for an annual premium of ₹20 to account holders aged 18–70?
Show answer
Answer: (c) PMSBY; PMJJBY is the ₹436 life cover for ages 18–50.
Further reading
- Master Direction – Regulatory Framework for Microfinance Loans, 2022 (RBI): the full rule book, with later amendments, including the 50% cap and recovery conduct.
- Malegam Committee report (RBI, January 2011): the best account of the Andhra Pradesh crisis and why the NBFC-MFI category was created.
- RBI Annual Report 2025-26, Chapter IV: Credit Delivery and Financial Inclusion: NSFI 2025-30, BC outlets, BSBDAs and PSL.
- MFIN Micrometer Q1 FY 2026-27 press release: the latest industry numbers, from the sector's SRO.
- SIDBI–Equifax Microfinance Pulse, Vol. XXVIII (September 2026): lender-wise portfolio, ticket sizes and delinquency, with state data.
- PIB explainer: 12 Years of PM Jan Dhan Yojana (27 August 2026): the government's own summary of PMJDY.
- PIB: Jan Suraksha schemes complete 10 years (9 May 2025): features and enrolment for PMJJBY, PMSBY and APY.
- World Bank, Global Findex Database: the global survey of account ownership, saving and borrowing.
Sources
- RBI Master Direction, Regulatory Framework for Microfinance Loans, 14 March 2022: definition, ₹3 lakh, 50% cap, pricing policy, no prepayment penalty, collateral, recovery conduct, 60% qualifying assets (footnote to circular of 6 June 2025), 25% limit for other NBFCs, NOF glide path (accessed 24 October 2026)
- MFIN press release on the RBI's qualifying assets circular, 9 June 2025: 85% in 2011, 75% in March 2022, 60% from 6 June 2025 (accessed 24 October 2026)
- RBI Master Directions listing: Reserve Bank of India (Non-Banking Financial Companies – Microfinance Institution) Directions, 2025, dated 28 November 2025 (accessed 24 October 2026)
- RBI, NBFC-MFI Directions, 2 December 2011: 85% qualifying assets, income and loan limits, 12% margin cap, 26% interest cap, two-lender rule (accessed 24 October 2026)
- Malegam Committee report: committee formed 15 October 2010, report 19 January 2011, recommendations, AP ordinance and Act, SHG-BLP pioneered by NABARD in 1992, JLG model (accessed 24 October 2026)
- MFIN Micrometer Q1 FY 2026-27 press release, 1 September 2026: ₹3,28,708 crore, shares, PAR, reclassification, ₹3 lakh review (accessed 24 October 2026)
- MFIN Micrometer Q4 FY 2025-26 press release, 12 June 2026: ₹3,25,174 crore, first rise after seven quarters, PAR 2.0% vs 6.3%, CGSMFI 2.0 (accessed 24 October 2026)
- MFIN Micrometer Q3 FY 2025-26 press release, 6 March 2026: ₹3,14,728 crore, about 50 lakh clients lost (accessed 24 October 2026)
- MFIN Micrometer Q2 FY 2025-26 press release, 11 November 2025: ₹3,39,510 crore vs ₹4,08,049 crore (accessed 24 October 2026)
- MFIN Micrometer Q1 FY 2025-26 synopsis: quarterly portfolio series from September 2022 to June 2025 (accessed 24 October 2026)
- MFIN Micrometer Q4 FY 2024-25 press release, 10 June 2025: ₹3,75,030 crore, −13.5%, heatwave, Karnataka, PAR 31–180 6.3% (accessed 24 October 2026)
- MFIN Micrometer Q4 FY 2023-24 press release, 7 June 2024: ₹4,33,697 crore, shares by lender type in March 2024 (accessed 24 October 2026)
- MFIN press release, 25 November 2024: July and November 2024 guardrails, SRO status (accessed 24 October 2026)
- MFIN–NCAER study press release, 2 April 2026: 1% informal borrowing, 97–178% informal rates, FOIR 18.7% (accessed 24 October 2026)
- MFIN press release on the Bihar bill, 27 February 2026: bill adopted 26 February 2026, ₹48,569 crore in Bihar (accessed 24 October 2026)
- SIDBI–Equifax Microfinance Pulse, Vol. XXVIII, September 2026: ₹2,69,274 crore by lender type, delinquency, ticket sizes (accessed 24 October 2026)
- PIB explainer, 12 Years of PM Jan Dhan Yojana, 27 August 2026: 59.09 crore accounts, ₹3,16,514 crore, ₹15,670 crore in March 2015, Guinness record, features (accessed 24 October 2026)
- PMJDY progress report: 59.59 crore accounts and ₹3,24,069.14 crore on 14 October 2026, split by bank group (accessed 24 October 2026)
- PIB anniversary releases of 2021, 2022, 2023, 2024 and 2025: PMJDY accounts and deposits each August, average balances, JAM, ₹6.9 lakh crore of DBT in 2024-25, ₹30,945 crore under PMGKY (accessed 24 October 2026)
- PIB, Jan Suraksha schemes complete 10 years, 9 May 2025: premiums, cover, age limits, enrolment and claims (accessed 24 October 2026)
- RBI press release, 16 July 2026: FI-Index 70.0 for March 2026 (accessed 24 October 2026)
- RBI Annual Reports, Chapter IV, 2021-22, 2022-23, 2023-24, 2024-25 and 2025-26: FI-Index series and weights, sub-indices, NSFI 2019-24 and 2025-30, branches, BCs, BSBDAs (accessed 24 October 2026)
- World Bank, World Development Indicators, account ownership (FX.OWN.TOTL.ZS): Global Findex account ownership for India and the world, 2011–2024, and by sex (accessed 24 October 2026)
- Vision IAS, Global Findex 2025, 18 July 2025: 16% of Indian account owners without an active account (accessed 24 October 2026)