New Delhi, July 30 -- The path to revival of India's microfinance institutions (MFIs) is likely to be tough, with profits expected to return to normal only by the end of this financial year, according to a report by Crisil Ratings.

Although new rules under the Guardrails 2.0 framework (starting April 1, 2025) have reduced MFIs' risk of lending to borrowers who are already heavily in debt, older loans are still causing problems.

The new set of Guardrails 2.0 elaborates points on Interest rate and processing fee, retains the points like on Loan repayment obligations of missing EMI loans and adds points on KYC and CIC reporting.

But, the legacy loans are putting pressure on the overall loan quality.

Furthermore, the report added that the...