Tamil Nadu sees steep fall
Microfinance Loan Drop in Tamil Nadu in 2025: The microfinance sector in Tamil Nadu is going through a rough patch. In fiscal 2025, the Gross Loan Portfolio (GLP) dropped sharply. From ₹58,200 crore in fiscal 2024, it slid to just ₹46,800 crore in 2025. That’s a decline of 19.6%, which is quite significant for a state that was once leading in microfinance lending.
Quarterly performance is also weak
When we look at the quarter-on-quarter numbers, the drop is even more striking. The portfolio fell 7.7% within a few months, coming down from ₹50,700 crore. Tamil Nadu isn’t alone in this dip. Karnataka followed closely with a 7.0% decline in the same period.
This trend shows that even economically active states are facing credit stress in the microfinance space. The reasons could include rising defaults, lesser demand from borrowers, or stricter lending policies by microfinance institutions.
What it means for microfinance?
Microfinance plays a big role in states like Tamil Nadu and Karnataka. It supports self-help groups, rural women entrepreneurs, and small traders who don’t get easy access to regular bank loans. So a sharp drop in GLP is more than just a financial stat—it affects thousands of livelihoods.
For example, in villages near Madurai or Coimbatore, small vegetable sellers or tailoring unit owners often depend on small-ticket loans from microfinance firms. A fall in lending means they might struggle to manage or grow their businesses.
Static GK
The concept of microfinance began taking shape globally in the 1970s, with Grameen Bank in Bangladesh being one of the first models. In India, the Self-Employed Women’s Association (SEWA) in Gujarat was among the early champions of microcredit. Today, the sector is regulated by the RBI and includes NBFC-MFIs, banks, and Small Finance Banks.
Tamil Nadu, historically, has been among the top three microfinance markets in the country. A fall in its loan portfolio signals possible corrections or structural shifts in the sector.
Static Usthadian Current Affairs Table
Microfinance Loan Drop in Tamil Nadu in 2025:
| Topic | Details |
| Tamil Nadu GLP FY25 | ₹46,800 crore |
| Tamil Nadu GLP FY24 | ₹58,200 crore |
| Annual decline | 19.6% |
| Quarterly GLP (Previous Quarter) | ₹50,700 crore |
| Quarterly decline | 7.7% |
| Karnataka quarterly decline | 7.0% |
| Sector relevance | Microfinance, NBFC-MFIs, SHGs, rural finance |
| Early microfinance model | Grameen Bank (Bangladesh) |
| Microfinance pioneer in India | SEWA (Gujarat) |
| Regulator of microfinance sector | Reserve Bank of India (RBI) |
