New Delhi, May 27 -- India's microfinance sector has witnessed a dramatic deterioration in asset quality during the fiscal year ended March 2025, with portfolio at risk (PAR) for loans overdue by more than 31 days surging 163 percent to Rs 43,075 crore from Rs 16,379 crore in the previous year.

This substantial increase reflects mounting financial stress among small borrowers across the sector.

The industry's gross loan portfolio (GLP) contracted by 13.9 percent to Rs 381,200 crore as of March 2025, down from Rs 442,700 crore a year earlier.

This decline represents a strategic shift by lenders toward more cautious lending practices amid emerging stress indicators and evolving regulatory oversight.

According to data from CRIF High Mark...