New Delhi, Oct. 8 -- India's microfinance sector ended financial year 2026 (FY26) with its loan book down 11% to Rs.3.34 trillion, although a 4% sequential increase in the January-March quarter marked the first signs of a turnaround after a prolonged period of stress, according to the Bharat Microfinance Report 2026 released by Sa-Dhan on Thursday.

Sa-Dhan is an RBI-appointed self-regulatory organisation (SRO) for microfinance institutions.

The report, however, cautioned that the recovery remains tentative. While stress in the current loan book has eased sharply, legacy stressed assets continue to weigh on the sector, with the share of loans overdue by 180 days or more rising to 17.04% in March 2026 from 10.67% a year earlier.

The repo...