MUMBAI, May 21 -- India's microfinance institutions (MFIs) are returning to growth mode after almost two years of sector-wide stress, but management commentary indicates the recovery will be measured and cautious as these lenders grapple with geopolitical uncertainty, inflation risks and a structurally altered lending environment.

CreditAccess Grameen Ltd, Spandana Sphoorty Financial Ltd and Satin Creditcare Network Ltd suggested that collection efficiency and asset quality have improved materially, aided by stricter underwriting norms and guardrails introduced after the recent microfinance crisis.

"The sector is healing," H.P. Singh, chairman and managing director of Satin Creditcare, said during the company's Q4 earnings call on 12 Ma...