Ind-Ra downgrades FY26 outlook for microfin companies
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Mumbai: India Ratings & Research (Ind-Ra) has downgraded its outlook on the microfinance sector to 'deteriorating' from 'neutral' for the next fiscal ending March 2026, citing multiple headwinds such as borrower overleveraging, fraud, and lower footfalls in MFI centres. The banking sector, as a whole, will continue to be stable, said the agency. The sector-specific headwinds are expected to inflate operational and credit costs for microfinanciers in the medium term, Ind-Ra said. The rating agency expects asset quality stress for micro finance companies to continue in the near term with tightening of funding by banks and capital raising constraints expected to add to the challenges of the sector. Ind-Ra expects MFI loan growth to take a backseat unless there is a consistent improvement in collection efficiencies. It expects only a moderate recovery in profitability in FY26. The agency, however, has maintained a stable r...