India Microfinance Market, By Type, By Bank Type, By Non-Bank Type, By Area, By End-Use Trend Analysis, Competitive Market Share & Forecast, 2018-2028

India Microfinance Market to Grow at a CAGR of 11.3% during Forecast Period

India Microfinance Market is flourishing owing to assist the unbanked population in achieving growth as well as being self-sufficient, and improved risk management along with the focus on micro insurance, and initiatives to boost consumer awareness are being implemented.

A recent study conducted by the strategic consulting and market research firm, BlueWeave Consulting, revealed that the India Microfinance Market is predicted to grow at a CAGR of 11.3% until 2028. The India Microfinance Market is booming due to increasing microenterprises, government initiatives to support microfinance, and reduced interest rates. Also, the nationwide microfinance sector is predicted to grow rapidly in the years to come. The crucial role microenterprises play in advancing economic development is favorably affecting the market growth. Moreover, the growth of SMEs and lower-income groups, especially women in rural areas, their capacity to maintain home and social living, together with government attempts to encourage fair competition and enhance the national payment system, are some of the key drivers supporting the market expansion. Microfinance companies' longer payback terms and hefty interest rates, however, restrain the market's expansion.

Microfinance Industry Adoption of Cutting-Edge Technology

Market expansion is supported by the rising use of digital technology in the microfinance industry to give people additional channels and boost their revenue potential. Additionally, improved connections in underdeveloped areas and technological advancements in some fields are projected to present the lucrative potential for market expansion. Additionally, the microfinance sector has a high penetration of modern technologies in emerging markets, including POS, ATMs, mobile banking, and others, which presents prospects for the business in the future. For example, the Indian government has developed several financial assistance programs for current and future MSMEs. These programs are designed to give aspirant MSMEs financial support so they can establish themselves and/or reach their full potential.

Change from Traditional Lending to Microfinance

Because of the surge in smartphone and internet user penetration across the country, online finance has witnessed significant growth in recent years. Microfinance is regarded as one of the practical and often used solutions for lenders because it provides quick affordability for applications. In recent years, many firms and individuals have begun to submit online loan applications rather than going through traditional lending procedures. According to a report by industry group MFIN and KPMG, the microfinance sector has been able to quickly convert to a more efficient digital model to cover a larger population at a lower cost. Additionally, the ease with which borrowers can apply for loans is driving market expansion, as are numerous advantages for lenders like automated loan administration and quick approval.

Challenge: Excessive Interest on Small Amounts

The high-interest rates that microfinance organizations and microlenders charge for a variety of different loan sizes are the key barrier preventing the market's expansion. A short repayment time and high fees are also outcomes of microfinance's primary focus on increasing revenue. Microfinance institutions are forced to charge high-interest rates and have brief repayment terms as a result of their significant borrowing from banks and other institutions, which limits the market's growth. Additionally, many microfinance institutions across the country must use private equity to raise capital because traditional microfinance banks are allowed to collect deposits as a means of funding loans that harm market growth. Additionally, the expansion of the microfinance sector is being hampered by stricter government regulations.

Segmental Coverage

India Microfinance Market - By End-User

Based on end-user, the India Microfinance Market is segmented into Agricultural and Allied Services, Services, Trade & Business, Education, Production, and Others. The agricultural and allied services segment accounts to hold the largest market share. One way to close that gap is by using microfinance organizations, which give farmers access to professional advice and low-interest loans, enabling them to break free from poverty. People's trust in the government grows as their money and living conditions rise. Moreover, trade and business are expected to dominate the market share. People can obtain acceptable small business loans through microfinance in a secure manner that adheres to moral lending principles. These loans are typically given out to support business owners in underdeveloped nations that operate microenterprises. The production of baskets, stitching, street vending, and poultry farming are a few examples of micro-enterprises.

Impact of COVID-19 on India Microfinance Market

Since the COVID-19 pandemic has made lending operations, such as past-due or non-collectible loans, an implicit component of the financial sector, the epidemic has had a moderate impact on the microfinance industry. Additionally, because of a statewide surge in patients, the government has closed some microfinance organizations. Additionally, the government offered several additional digital channels for microfinance firms to promote their goods and attract clients, which had a positive effect on the market's expansion. As a result, during the current health crisis, this has emerged as one of the main drivers of expansion for the microfinance industry. Institutions obstruct the growth of industries.

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.

The in-depth analysis of the report provides information about growth potential, upcoming trends, and statistics of the India Microfinance Market. It also highlights the factors driving forecasts of total market size. The report promises to provide recent technology trends in the India Microfinance Market and industry insights to help decision-makers make sound strategic decisions. Furthermore, the report also analyzes the growth drivers, challenges, and competitive dynamics of the market.