New Delhi, Oct. 8 -- The Indian microfinance sector is facing a critical turning point, as improved credit discipline is being overshadowed by a severe liquidity crunch, slowing its recovery, according to top industry experts.

While the asset quality stress seen in FY25 has largely eased, limited access to fresh capital now poses a serious challenge to sustaining recent gains.

Alok Misra, CEO and Director of the Micro Finance Industry Network (MFIN), said that credit underwriting discipline has improved by nearly 99 per cent after new regulatory measures were introduced, according to CNBCTV18.

However, loan disbursements have sharply fallen-from around Rs 85,000-Rs 90,000 crore per quarter to just Rs 48,000-Rs 50,000 crore-due to tight...