Microfinance sector under stress as portfolio at risk doubles despite lending caps

Microfinance sector faces rising asset quality concerns despite capping borrowers to a maximum of three lenders. Portfolio at Risk (PaR) in the 31–180 day bucket rose significantly across banks and NBFC-MFIs. Consequently, the sector's loan book contracted, funding slowed, and NBFC-MFIs continue to dominate the microfinance market.

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