Finance Ministry's Critical Meeting Amid Microfinance Stress

The Finance Ministry is set to meet microfinance institutions (MFIs) to address rising bad loans and sector-wide delinquencies. The meeting, chaired by the Department of Financial Services Secretary, comes as credit growth decelerates. The RBI's report highlights growing borrower indebtedness and uneven regional indebtedness across states.

The Finance Ministry will convene an important meeting with microfinance institutions (MFIs) on Wednesday to tackle the surge in bad loans and increasing delinquencies across the sector.

Sources suggest that the Department of Financial Services Secretary is expected to preside over the meeting along with senior MFI officials. The urgency of this meeting is underscored by the sector exhibiting signs of stress and mounting delinquencies.

According to the Reserve Bank's latest report, credit to the microfinance sector has slowed this fiscal year after experiencing rapid growth in the past three years. The report from December 2024 highlights an alarming increase in stressed assets and borrower indebtedness.

(With inputs from agencies.)