ECONOMIC OVERVIEW Global Economic Overview
The global economy entered 2025 navigating a complex and rapidly evolving landscape. As per the International Monetary Funds (IMF)s World Economic Outlook released in April 2025, while 2024 marked a period of moderate growth, with global GDP expanding by 3.3%, the underlying momentum remained relatively subdued, falling short of the historical average of 3.7% recorded between 2000 and 2019. This deceleration was shaped by a combination of structural and cyclical factors, including sustained policy tightening across major economies, geopolitical uncertainties, and sector-specific challenges that weighed on both advanced and emerging markets.
Throughout the year 2024, the performance of advanced and emerging economies diverged significantly. Advanced economies grappled with weak manufacturing activity, muted consumer sentiment, and persistent inflationary pressures. Rising energy costs, lingering effects of monetary tightening, and ongoing disruptions in global trade further dampened demand and restrained growth.
Emerging markets and developing economies, meanwhile, faced their own headwinds. Subdued external demand, capital outflows triggered by higher interest rates in advanced economies, and domestic policy uncertainties posed considerable challenges. Geopolitical tensions and trade disruptions also exerted pressure, particularly on export-reliant nations. Despite these constraints, certain emerging markets demonstrated resilience, buoyed by robust domestic consumption and targeted policy stimulus in select regions.
As the new year unfolds, the global economic trajectory continues to be reshaped by a convergence of structural shifts, policy realignments, and escalating geopolitical tensions. A major disruption to the global economic order emerged with the United States enactment of broad- based tariff measures, prompting swift retaliatory actions from several major trading partners. These developments culminated in the near-universal imposition of tariffs effective April 2, 2025, driving global tariff rates to historic highs not seen in over a century. The escalation was a significant setback to cross-border trade flows and has imparted a material drag on global growth.
The fallout from these developments was compounded by the rapid and unpredictable nature of these policy shifts, significantly intensifying economic uncertainty and diminishing the predictive value of traditional forecasting models. In this fluid environment, anchoring near-term projections to past patterns or assumptions has become increasingly untenable.
Against this backdrop, global headline inflation enters a phase of recalibration and is now expected to decline at a slower pace than previously anticipated. Projected to ease to 4.3% in 2025 and further to 3.6% in 2026, the tempered trajectory largely reflects an upward adjustment in inflation forecasts for advanced economies, partially offset by modest downward revisions for emerging markets and developing economies.
(Source: IMFs World Economic Outlook, April 2025)
Rising financial system fragility continues to be a growing concern, especially among Non-Bank Financia intermediaries (NBFIs). Equity markets remain volatile, asset valuations stretched, and corporate debt levels elevated, contributing to an increasingly uncertain financia andscape. Central banks are faced with the difficult task of containing inflation without inadvertently triggering broader financial instability, a delicate balancing act that will define the near-term outlook.
Performance of Major Economies
United States: The U.S. economy is projected to grow at a subdued pace of 1.8% in 2025, a scaled-down estimate from the IMFs earlier projection released in January 2025 - driven by the confluence of restrictive monetary policy and escalating trade disruptions. Inflation is expected to persist at around 3%, with recent tariff measures alone contributing an estimated one percentage point to the overall inflationary dynamics. Simultaneously domestic consumption continues to lose momentum, while the manufacturing sector faces mounting challenges from escalating input costs amidst persistent disruptions in the global supply chain.
China: Chinas growth outlook for 2025 is revised downward to 4% from 4.6% in the January 2025 WEO update, reflecting the possible cumulative impact of softer external demand, ongoing internal deleveraging, and structural transitions towards a consumption-led economy. Additionally, recently implemented tariffs by the United States are expected to further dampen export performance and investor sentiment. Inflation is expected to remain low, with a potential drift into deflation, highlighting concerns around persistent demand- side weakness. This trend may reintroduce credit stress, particularly within the property sector.
Euro Area: The Eurozone economy continues to face headwinds, with GDP growth for 2025 now revised down to 0.8%, 0.2% points lower than earlier projections. Weak consumption and sluggish exports continue to weigh down economic activities. The situation is further aggravated by political instability in select regions and persistent energy insecurity, undermining investor confidence, especially in key economies, such as Germany and France.
India: India has firmly established itself as the worlds fourth- largest economy, surpassing Japan, with an impressive GDP growth of around 6.5% in 2024-25, positioning it as the fastest-growing major economy amid global turbulence. The start of a rate-cut cycle, marked by a cumulative 100 basis points reduction in 2025, including a sharp 50 bps cut in June 2025, reflects the RBIs confidence as inflation hovers near a six-year low of ~3%, comfortably within its 4% target. Combined with stable crude prices easing cost pressures, ample foreign exchange reserves that support rupee stability, and sustained domestic demand, the macroeconomic backdrop is strong. However, corporate earnings are yet to reflect these positive shifts, with many companies reporting weak margins and tepid investment.
Emerging Markets: Emerging market economies are particularly exposed under the current global conditions. Rising sovereign debt servicing costs, capital outflows fueled by widening interest rate differentials, and depreciating currencies are intensifying inflationary pressures and increasing macroeconomic risks. Together, these dynamics heighten the threat of abrupt investment halts and potential debt distress. Without swift multilateral support and activation of structured debt resolution frameworks, financial stress across these economies could escalate further.
Outlook
The global economy is poised for a gradual recovery, despite persistent challenges, driven by easing inflationary pressures and resilient consumption demand in key markets. Flowever, the pace and distribution of growth are expected to remain uneven across regions. Advanced economies may face slower momentum due to tighter financial conditions, while emerging markets may benefit from firmer domestic demand and improving external balances.
Navigating the near-term uncertainty and complex global environment will require collaborative international action. Progress in areas such as trade facilitation, resolution of debt distress, and targeted structural reforms are likely to shape the recovery trajectory. Policymakers are likely to recalibrate monetary policy to strike a balance between supporting growth and anchoring inflation expectations, while fiscal strategies may increasingly prioritize targeted spending and strategic consolidation.
Looking ahead, international cooperation will be vital in addressing cross-border challenges, including climate finance, digital integration, and supply chain resilience. As countries align on shared goals and implement credible reforms, the global economy could witness a moderate but stable rebound, setting the stage for long-term sustainability and inclusive growth.
(Source: IMFs World Economic Outlook, April 2025)
INDIAN ECONOMIC OVERVIEW
Indias economic trajectory in 2024-25 emerged as a standout amidst a challenging global backdrop marked by escalating global trade tensions and persistent geopolitical uncertainties. With Gross Domestic Product (GDP) growing at 6.5%, India continued its streak as the worlds fastest-growing major economy outperforming even the largest global economies and reaffirming its fundamental resilience. This momentum was driven by a strong pipeline of government-led infrastructure investments and sustained expansion in key sectors, including finance, real estate, and construction. Additionally targeted financial inclusion measures and a robust agricultural performance have supported rural demand, further contributing to overal economic growth. Notably in Q4 (January 01, 2025 - March 31, 2025 ) of 2024-25, Indias real GDP surged by 7.4% year-on-year, the highest quarterly growth of the fiscal year, driven by a sharp rebound in industrial activity, particularly manufacturing, mining, and construction, alongside a significant uptick in net indirect tax collections. In its June 06, 2025 policy review, the RBI executed a 50 bps repo rate cut, bringing the rate down to 5.50%, and simultaneously trimmed the Cash Reserve Ratio (CRR) by 100 bps, injecting nearly INR 2.5 Trillion of liquidity into the banking system. This front-loaded easing, building on earlier cuts of 25 bps in February and April, signals a decisive pivot to rejuvenate growth. The policy stance has shifted from accommodative to neutral, reflecting a strategic pause, even as the central bank signals readiness to act further if conditions warrant. With inflation firmly under control and ample liquidity these measures aim to stimulate lending (especially to MSMEs and retail borrowers), support credit transmission, and fortify the broader economic recovery amid external uncertainties. This monetary easing coincided with global volatilities stemming from the United States announcement of sweeping tariffs, including a proposed 10% baseline tariff on nearly all merchandise imports and a 26% levy on Indian goods. While initial apprehensions emerged around the potential impact of these measures on key Indian export sectors, such as electronics and marine products, a subseguent 90-day pause was placed on most reciprocal tariffs providing temporary relief to Indian exporters. Although the 10% baseline tariff remains in effect, its long-term impact on Indian exports, initially a cause for concern is now anticipated to be minimal in the long-term. Meanwhile, inflation remains under control, though core inflation continues to be sticky, requiring careful monetary management. In a significant development, Indias inflation slowed to its lowest level in nearly six years, with retail inflation eased to 3.16% in April 2025, remaining below the RBIs 4% target for the third consecutive month, as food prices rose at a slower pace. The easing inflation also signals improving supply-side dynamics, particularly across food and core components, further reinforcing the outlook for sustained economic momentum.
(Source: Reuters)
Indias domestic fundamentals remained firmly intact in the face of external disruptions. Continued government emphasis on infrastructure development, prudent fiscal management, and well-calibrated welfare schemes provided a vital buffer to the economy against global shocks. Labor markets conditions continued to show signs of recovery, supporting household incomes and enhancing consumption across both urban and rural regions. Simultaneously, the Banking, Financial Services, and Insurance Sector (BFSI) maintained robust momentum, reinforcing macroeconomic stability. Collectively, these dynamics enabled the Indian economy to weather global volatility, while sustaining its long-term growth trajectory.
Agriculture and Allied Sectors:
The agricultural sector rebounded with a growth rate of 4.6% in 2024-25, supported by food grain production rising 4.8% to 330.9 Million tonnes according to the second advanced estimates. This increase is driven by a 6.8% rise in Kharif and a 2.8% gain in Rabi crops, aided by a favorable monsoon that boosted rural incomes and demand. Government initiatives like higher MSPs, expanded crop insurance, better irrigation, and greater agri-tech adoption further strengthened the sectors resilience and growth prospects.
Industrial Sector
The industrial sector grew by 6.1% in 2024-25, reflecting the broad-based momentum across manufacturing, construction, mining, and utilities. This robust trajectory was driven by buoyant construction activities, higher manufacturing output across industries, like automobiles, electronics and pharmaceuticals, and sound performance in mining and quarrying. Key utilities such as electricity, gas, and water supply witnessed steady expansion, supported by increased infrastructure investments. The manufacturing sub-sector, in particular, demonstrated resilience, with enhanced production levels bolstering overall industrial performance.
Services Sector:
Indias services sector remains the bedrock of its economic growth, with financial, real estate, and professional services expanding by ~7.2% in 2024- 25, and trade, transport, and communication services growing by 6.18%, fueled by buoyant consumer demand and strong hiring. Yet emerging headwinds are reshaping this dynamic: tighter visa restrictions, especially in the U.S. have slowed talent mobility, prompting a shift toward offshore models and robust local hiring strategies, thereby insulating the sector but potentially compressing margins due to higher wage costs. At the same time, the adoption of Al technologies is beginning to transform service delivery: sectors like call-centres, IT consulting, and software development are seeing productivity boosts of 45%-60% through GenAI, accent-neutralization tools, automated workflows, and Al-driven logistics solutions. While Al drives efficiency gains and cost reductions, it also accelerates automation in routine roles—placing pressure on lower- and middle-tier jobs. Looking ahead, the sustainability of this growth will hinge on strategic reskilling, offshore delivery models, and increased investment in Al to secure long-term value creation.
(Source: Press Information Bureau)
The Union Budget 2025-26 reinforced the governments commitment to sustainable growth while maintaining fiscal discipline. Capital expenditure was raised to an unprecedented INR 11.21 Lakh Crores (~3.1% of GDP), underscoring a strategic focus on infrastructure, rural upliftment, and catalyzing private sector investment. The fiscal deficit target was further trimmed to 4.9%, demonstrating prudent budget management. A major boost came from the RBIs record dividend transfer of INR 2.69 Lakh Crores, substantially above the budgeted INR 2.56 Lakh Crores, which creates roughly INR 70,000 Crores of extra fiscal room. This contribution alone could lower the deficit by 20-30 bps, potentially bringing it near 4.2% of GDR or alternatively, enabling enhanced capital spending on key priorities, all while preserving fiscal prudence.
Consumption revival remained a key policy focus, with higher allocations to rural flagship schemes, enhanced Direct Benefit Transfers (DBTs), and tax relief under the new income tax regime effected to achieve intended outcome. These steps are expected to strengthen disposable income and boost consumption recovery, particularly among rural and middle-income households.
Outlook
Indias prospects for 2025-26 remain resilient, with GDP projected to grow by 6.3% as per World Banks Global Economic Prospects Report released on June 2025. This positive curve is supported by a combination of strong domestic fundamentals and strategic policy initiatives. The gradual revival in private capital expenditure and steady improvement in consumption are anticipated to be the key drivers of economic momentum. Concerted measures under the Make in India program, sustained investments in digital public infrastructure, and the Production-Linked Incentive (PLI) schemes are set to strengthen the manufacturing ecosystem. A robust rural recovery, backed by targeted financial inclusion measures, is expected to drive strong demand across segments. With inflation showing signs of moderation and RBI maintaining a supportive monetary policy stance, the overall macroeconomic environment is expected to remain stable. Additionally, large-scale infrastructure development, favorable demographic dynamics, and rising investor confidence are likely to further support Indias long-term growth trajectory, notwithstanding an increasingly complex and volatile global landscape.
(Source: Reuters, Press Information Bureau, Deloitte)
INDUSTRY OVERVIEW Indian BFSI Sector Review
Indias BFSI sector continues to plays a pivotal role in enabling economic dynamism, fostering inclusive growth, and supporting the nations digital transformation. In 2024- 25, the sector operated against a backdrop of regulatory tightening, global volatility, and evolving macroeconomic conditions. Liquidity scenario fluctuated through the year, as the Reserve Bank of India (RBI) maintained a calibrated, cautious approach, aimed at controlling inflationary pressures. While Indias overall growth outlook stayed positive, the tightening of credit norms, particularly in the unsecured lending space, tempered the pace of expansion across key financial segments.
Within this environment, the Indian banking sector remained resilient, supported by strong capital buffers and improving asset quality. The RBIs liquidity support measures, along with regulatory moves such as proposed caps on banks exposure to Alternative Investment Funds (AIFs), aimed to strengthen governance and systemic stability. Banks continued to invest in digital infrastructure, enhance risk frameworks, and manage rising compliance demands, positioning themselves as stable enablers of credit growth and economic momentum.
The RBI adopted proactive measures, aimed at safeguarding financial stability. These initiatives spurred institutions to fortify their risk management frameworks, bolster capital buffers, and revisit lending strategies. At the same time, financial entities faced rising compliance costs, driven by enhanced KYC requirements, stringent data protection regulations, and new cybersecurity mandates. This shift highlighted the need for institutions to build resilient, technology-driven models that could seamlessly balance risk, compliance, and customer experience in an increasingly digital financial ecosystem.
Indian financial sectors evolving priorities are met with a marked acceleration in technology adoption over the past few years. Cybersecurity spending in the BFSI segment registered a robust CAGR of 35%, rising from USD 518 Million in 2019 to USD 1,738 Million in 2023. This surge was driven by increasingly stringent regulatory mandates and detailed policy frameworks. Simultaneously, the IT/ ITeS sector recorded a CAGR of 36% during the same period, as organizations sought to securely integrate advanced technologies, such as AI/ML, edge computing, and Generative Al.
(Source: DSC!)
This broader wave of digital transformation successfully percolated down to institutions at the grassroots level, particularly Non-Banking Financial Companies- Microfinance Institutions (NBFC-MFIs). As critical enablers of financial inclusion, NBFC-MFIs have embraced paperless, digital-first processes, leveraging technology to enhance outreach, streamline operations, and strengthen their impact. By extending last-mile credit access to women entrepreneurs, rural households, and micro enterprises, these institutions are transforming credit delivery, making it faster, more inclusive, and more responsive. However, as digital adoption deepens, preserving the human connection remains vital. Centre meetings continue to serve as a crucial touchpoint for building trust and community engagement. In an era of rising digital payments and individual lending, this client connection must not be diluted. A sustained focus on a tech and touch approach will ensure that NBFC-MFIs not only scale efficiently but also retain the relational ethos that underpins their success, catalyzing socio-economic mobility, promoting financial literacy, and empowering Indias heartlands.
As of March 31, 2025, NBFC-MFIs remained at the helm of Indias microcredit landscape, managing an Outstanding Loan Portfolio of INR 1,47,566 Crores. Their continued emphasis on affinity-based lending models and women- centric outreach nurtured a culture of responsible credit, while advancing the broader agenda of inclusive growth. Even amidst tighter regulations across the BFSI sector, NBFC-MFIs demonstrated remarkable adaptability, strengthening governance frameworks and amplifying their digital capabilities.
(Source: Micrometer Report - March 2025, Financial Times)
Indian Microfinance Sector Review
Indias microfinance sector, serving around 8 Crores active borrowers, stands as a major enabler of financial inclusion at grassroots level, empowering low-income households and marginalized communities, while facilitating a trickle- down impact of economic growth. Over the years, the sector significantly expanded access to formal credit for microentrepreneurs and self-employed individuals, particularly in the nations rural and underserved regions. Through its interventions, the microfinance sector enabled the targeted community build sustainable livelihood, while forging an active ecosystem that supports poverty alleviation and promotes comprehensive financial and social inclusion.
During 2024-25, the sector faced significant headwinds largely driven by multiple external factors and operational challenges, particularly in terms of asset guality. Rising borrower indebtedness strained repayment capacities, with loans overdue by 31 to 180 days increasing from 2.1% in March 31, 2024 to 6.3% as on March 31, 2025. The proportion of borrowers accessing credit from four or more lenders climbed from 3.6% in September 2021 to 5.8% in September 2024, raising concerns about overleveraging and potential systemic credit risk.
Amidst this volatile landscape, the microfinance sector disbursed INR 2,78,713 Crores across 5.4 Crore loan accounts in 2024-25, marking a year-on-year degrowth of 16.9% and 25.4%, respectively. While the overall expansion remained subdued, the sector continued to play a vital role in supporting the bottom of the pyramid through sustained credit outreach. Banks and NBFC-MFIs together continued to drive the majority of these disbursements, maintaining their leadership in extending credit penetration.
In response, the RBI has significantly strengthened the microfinance regulatory framework, blending risk management rigor with enhanced transparency and borrower protection. Key measures include restoring bank-to-NBFC risk weight norms to pre-2023 levels, creating greater capital efficiency and room for growth. The launch of mandatory Key Facts Statements (KFS) in local languages, issued before loan execution and requiring borrower acknowledgement, ensures clear disclosure of Annual Percentage Rate (APR), fees, recovery terms, and grievance procedures helping curb unethical practices. Simultaneously, the RBI lowered the Qualifying Asset (QA) threshold for NBFC-MFIs to 60% of total assets (netted off by intangible assets), enabling lenders to diversify into allied segments like MSME or micro-housing lending while maintaining security on core assets. On unsecured lending, credit exposure caps have been mandated and internal risk committees must closely monitor borrower limits, while credit bureau linkages have been expanded. Finally, digital lending norms now require automated, digitally-signed loan document kits (including KFS), issued via email/SMS, reinforcing auditability and consumer protection.
In 2024-25, the microfinance sector faced multiple shocks, prolonged election-related disruptions, severe heatwaves, and regional floods that hampered center meetings and squeezed collections. Repayment stress was particularly acute in Karnataka and Tamil Nadu, driven largely by borrower over-indebtedness and over-leveraging in these regions. In response, NBFC-MFIs sharply refocused on strengthening credit underwriting, deploying digital tools to streamline operations, and enhancing customer engagement through responsible lending protocols. Theyre also pursuing geographic diversification to reduce exposure to socio-political and climate-induced risks. These strategic shifts, combined with fortified regulatory guardrails like revised risk weights, enhanced transparency, key facts statements, and borrower protection norms, help build a resilient, inclusive sector capable of weathering localized stress and supporting sustainable growth. Microfinance players are also deepening their commitment to borrower-centric practices by investing in financial literacy initiatives and building robust grievance redressal mechanisms. These measures aim to empower borrowers with better financial awareness and offer transparent, responsive channels for support. Collectively, these proactive steps, ranging from regulatory compliance and technology adoption to diversification and borrower empowerment, reflect the evolution of a maturing industry. It is one that is continuously adapting to balance risk, ensure regulatory alignment, and enhance its social impact on underserved communities.
Government initiatives, such as Pradhan Mantri Jan Dhan Yojana (PMJDY), MUDRA, and Stand-Up India continue to complement industry efforts by broadening the reach of formal financial services in rural India. With continued policy backing, evolving regulatory frameworks, and accelerated digital adoption, Indias microfinance sector is positioned to sustain its growth momentum and enhance its contribution to inclusive economic development. (Source: Times of India, Economic Times) )
Portfolio Outstanding of the Microfinance Sector
As on March 31, 2025, the microfinance industry had total loan portfolio of INR 3,75,030 Crores. The total number of active loans accounts were 13.3 Crores with 7.8 Crores unique borrowers as on March 31, 2025. On an YoY basis (March 31,2024 to March 31,2025), the GLP has degrown by 13.5%.
Guardrails 1.0 by MFIN
Effective August 2024, capped microfinance borrowers to a maximum of four lenders and a total indebtedness of INR 2 Lakhs, instilling initial discipline in lending practices.
Guardrails 2.0 by MFIN
To reinforce credit discipline and promote sustainable growth in the microfinance sector, the Microfinance Institutions Network (MFIN) introduced Guardrails 2.0 in November 2024. These enhanced guidelines, effective January 1, 2025 (with select provisions deferred to April 1,2025), aim to mitigate borrower over-indebtedness and enhance sectoral resilience.
Key Highlights
• Lender Cap: The number of microfinance lenders per borrower is now capped at three, down from four. This applies strictly to microfinance loans and excludes retail credit. Implementation of this cap was extended to April 1,2025, to ensure smooth operational transition.
• Indebtedness Limit: A borrowers total outstanding debt is capped at INR 2 Lakh, inclusive of all microfinance and unsecured retail loans. Secured loans, such as those backed by gold or property, are excluded from this ceiling.
• Delinquency Restriction: Institutions are prohibited from lending to borrowers with overdue payments exceeding INR 3,000 for more than 60 days, tightening the previous 90-day threshold.
• Interest Rate and Fee Transparency: Boards of member institutions must review and rationalize interest rates, ensuring benefits of operational efficiency are passed on to borrowers. Additionally apart from processing fees and credit life insurance, no other charges may be deducted from the disbursed loan amount.
(Source: Micrometer )
INDIAN NON-BANKING FINANCIAL COMPANY- MICROFINANCE INDUSTRY (NBFC-MFI) REVIEW
Among the various lending institutions within the Indian microfinance space, NBFC-MFIs remain the largest contributors, holding a portfolio share of 39% as of March 31,2025. Banks and Small Finance Banks (SFBs) follow with portfolio shares of 33% and 16%, respectively. The overall microfinance loan portfolio stood at INR 3.75 Lakh Crores by the end of March 2025. Although portfolio expansion remained subdued during the year, the sector continued to display underlying strength amidst a challenging operating environment. The industry, through its observe, learn and adapt approach, has proved to be a catalyst under the changing contours. Industry participants, particularly NBFC-MFIs, have been actively implementing measures to strengthen portfolio quality, ranging from tighter credit assessment norms to enhanced monitoring and recovery mechanisms. These efforts reflect a broader industry shift towards more responsible and sustainable lending practices. The Portfolio at Risk (PAR) for loans overdue by 31 -180 days within the NBFC-MFIs segment witnessed a rise from 2.0% in March 2024 to 6.6% in March 2025. This uptick indicates rising stress in borrower segments, particularly those impacted by inflationary pressures and external disruptions, such as climate-related swings. During 2024-25, the average ticket size of microfinance loans disbursed by NBFC-MFIs continued to rise steadily, reaching INR 51,488 in 2024-25, up from INR 46,761 in 2023-24. This marks a year-on-year growth of 10.1%, extending the upward trajectory observed over the past few years. The sustained increase reflects a combination of factors, including inflation-adjusted credit needs, rising borrower confidence, and lenders willingness to extend slightly higher loan amounts to existing and reliable customers. This trend also suggests a gradual shift towards slightly higher-value borrowing, even as institutions continue to manage credit risk prudently.
During the year, NBFC-MFIs disbursed loans worth INR 1,06,150 Crores, recording a degrowth in disbursement as compared to INR 1,30,617 in 2023-2024.
Policy support and regulatory measures are expected to provide a strong anchor for the progress of the microfinance ecosystem. The RBIs revised Regulatory Framework for NBFC-MFIs and the continued classification of microfinance under priority sector lending ensured steady funding and operational clarity for lenders. Complementing these efforts, government initiatives focusing on women entrepreneurs and Self-Help Groups continue to enhance financial access for millions. Even as asset quality challenges persist, the NBFC-MFI segment remains central to Indias inclusive growth strategy. Their ability to combine grassroots presence with disciplined lending practices position them favorably to deepen financial penetration in rural and semi- urban regions. With their expanding outreach and evolving credit offerings, NBFC-MFIs remain a dependable credit source for financially underserved communities.
(Source: Micrometer Report, March 2025)
KEY FACTS - INDIAN MICROFINANCE INDUSTRY
(as on March 31, 2025)
7.8 Crores |
INR 2,78,713 Crores |
| Number of Unique Borrowers | Disbursement |
INR 3,75,030 Crores |
39% |
| Portfolio Outstanding | Share of NBFC-MFI in Portfolio Outstanding |
718 Districts |
Bihar |
| Portfolio Spread | Largest State in Terms of Portfolio Outstanding |
Functioning Mechanism of the Indian Microfinance Industry
The Joint Liability Group (JLG) model continues to maintain its position as one of the most widely adopted approaches in the Indian microfinance sector, tailored for borrowers without access to traditional banking. Under this model, small groups of borrowers, often engaged in similar livelihood activities, come together to jointly secure loans. This peer accountability reduces credit risk and fosters strong repayment discipline.
The JLG-based lending process begins with the formation of small, self-selected Joint Liability Groups followed by comprehensive documentation, structured training sessions, and digital KYC, credit-bureau checks, indebtedness assessments, and house verifications via handheld devices, ensuring a streamlined, paperless onboarding. Once approved, loans are disbursed directly into borrower accounts, and regular group (Kendra) meetings are held weekly or fortnightly to monitor progress and enforce accountability. Digital tools also enable real-time loan utilization checks and automated repayment tracking. By pooling social collateral instead of traditional assets, JLGs empower small-scale farmers and entrepreneurs, especially in rural and semi-urban areas to access credit, manage financial risk cooperatively, and build sustainable livelihoods, thus advancing both inclusion and empowerment.
INDUSTRY-WIDE CHALLENGES Macroeconomic and Operational Challenges
Debt-waiver campaigns, election-related disruptions, extreme heatwaves, and high field-staff attrition collectively mpacted collections and disbursals. Given this backdrop, Bihar, Uttar Pradesh, Tamil Nadu, and Odisha accounted for 62% of incremental delinquencies. Worsening borrower cash flows further eroded repayment capabilities, amplifying stress across key geographies.
Overleveraging and Overlapping Borrower Exposures
Overleveraged borrowers are placing immense stress on repayment abilities. Approximately 37% of individuals with both microfinance and retail loans are now delinquent, mirroring broader systemic strain, especially in high-risk states like Uttar Pradesh, Bihar, and Odisha, which together account for over 60% of fresh delinquencies. Despite efforts to reduce the number of lenders per borrower, overall credit exposure remains elevated, resulting in high vulnerability to income shocks and external stressors.
Rising Delinquencies and Portfolio at Risk (PAR)
The Portfolio at Risk (PAR 31 -180 days) increased to 6.6% as on March 31,2025, from 2.0% a year earlier, reflecting shortterm repayment stress. However, this trend underscores the importance of ongoing portfolio monitoring and borrower support initiatives, which are being actively strengthened across the sector to ensure long-term stability and recovery.
Tackling High Attrition Levels
The microfinance sector continues to face elevated attrition rates among field-level employees. However, with targeted learning and development programs, coupled with clearly defined career progression pathways, sector can mitigate attrition levels and enhance employee engagement over time.
(Sources: Indian Express, Business Standard, Economic Times)
Growth Catalysts
• Expanding the Frontiers of Financial Inclusion
The microfinance sector continues to bridge the financial divide and advance credit access for underserved and economically marginalized communities, particularly in rural and semi-urban geographies. This progress is reflected in the Reserve Bank of Indias Financial Inclusion Index (Fl-lndex), which rose to 64.2% in March 2024 from 60.1% in March 2023, indicating growth across all sub-indices. The improvement was mainly driven by the Usage dimension, reflecting a deepening of financial inclusion. This upward trend underscores the sectors role in reinforcing its core mission of inclusive economic empowerment.
(Source: PHD Chamber)
• Sustained Demand for Income-Enhancing Credit Solutions
A persistent and growing appetite for microcredit among self-employed individuals, women entrepreneurs, and small businesses - driven by their pursuit of sustainable livelihood opportunities - remains a core driver of sectoral momentum.
• Policy-Driven Ecosystem
Strategic government interventions through flagship initiatives, such as the Pradhan Mantri Jan Dhan Yojana (PMJDY), MUDRA Yojana, and support for Self-Help Groups (SHGs) continue to boost the credit landscape, fostering inclusive growth and empowering grassroots entrepreneurship.
• Progressive Regulatory Reforms
The RBIs Harmonized, Risk-Sensitive Regulatory Framework consistently promotes responsible lending, operational discipline, and borrower protection across the microfinance sector. Key reforms include the removal of interest rate caps for N BFC-MFIs, household income-based repayment limits (capped at 50% of household income), enhanced transparency through standardized loan disclosures, and robust grievance redressal mechanisms. These measures culminate into a transparent and borrower-centric ecosystem, ensuring equitable access to credit, while curbing the risk of over-indebtedness.
• Leveraging Priority Sector Lending (PSL)
The microfinance sector continues to benefit from its classification under priority sector lending norms, which secures a steady and affordable flow of capital from mainstream financial institutions. This access to funding enhances liquidity management and supports portfolio expansion, empowering institutions to offer credit to underserved segments more effectively.
• Strategic Geographic Diversification and Market Penetration
The sectors deliberate expansion into underpenetrated and emerging markets mitigates regional concentration risks, unlocks new growth opportunities, and reduces overexposure to traditionally saturated microfinance geographies.
• Leveraging Flexibility in Lending with Relaxed QA Norms
The RBIs relaxation of the Qualifying Asset (QA) norm to 60% down from 75% of total assets (netted off by intangible assets) unlocks substantial growth opportunities for NBFC-MFIs. This update enables them to expand beyond traditional microloans into adjacent segments like MSME, micro-housing, and retail finance, thereby tapping into the missing middle. By diversifying their portfolios, MFls can better optimize cash and liquid asset buffers, improve risk-adjusted returns, and pursue cross-cycle stability. Enhanced flexibility also makes regulatory compliance easier and bolsters investor confidence-supporting stronger balance sheet resilience and sustained growth
• Leveraging ESG Integration for Diversified Funding and Sustainable Growth
The growing emphasis on environmental, social, and governance (ESG) practices presents a significant growth avenue for the microfinance sector. By embedding ESG principles into their core operations and organizational culture, MFls can unlock access to diverse funding sources such as social loans, gender-focused loans, and green finance from globa developmental financial institutions (DFIs). This strategic alignment not only enhances the sectors credibility and sustainability but also attracts new classes of impact-oriented lenders, expanding the nvestor base and accelerating inclusive growth.
(Source: Mint, Economic Times)
Policy Support in 2024-25
In 2024-25, both the Government of India and RBI mplemented a series of strategic policy initiatives aimed at strengthening the microfinance ecosystem and propelling the national agenda of financial inclusion.
• Launch of Unified Lending Interface (ULI)
The Government introduced ULI, a digital platform designed to streamline and democratize credit access for rural and small borrowers. By enabling consent- based digital data sharing and reducing appraisa timelines, ULI is poised to redefine micro-lending, mirroring the transformative impact that URI had on digital payments.
• Higher Collateral-Free Agriculture Loan Limit
The RBI increased the ceiling for collateral-free agricultural loans from INR 1.6 Lakhs to 1NR 2 Lakhs. The move is aimed at supporting small and margina farmers by addressing the rising costs of agriculture inputs and improving credit accessibility for low- income rural households.
(Source; Press Information Bureau)
• Regulatory Relief for Microloans
The RBI eased capital requirements for microfinance loans in February 2025, reducing the risk weight on consumer microloans from 125% to 100%. This decline in capital requirement encourages greater credit flow into the microfinance sector.
• Priority Sector Lending (PSL) Guidelines Update
The RBI revised its PSL guidelines in March 2025 to enhance credit access to critical sectors of the economy and promote financial inclusion. The updated framework introduced several impactful changes, including an increase in the cap on housing loans eligible for PSL classification and an expanded coverage of the renewable energy sectors activities. It also raised the PSL target for urban cooperative banks to 60% of adjusted net bank credit (ANBC) or credit equivalent of off-balance sheet exposures (CEOBSE), whichever is higher. The revisions also widened the definition of weaker sections category to broaden the beneficiary base and removed the cap on loans to individual women recipients by urban cooperative banks.
Outlook
Indias microfinance sector is projected to grow by 12%- 15% in 2025-26 under a conservative scenario, signalling a return to performance levels last seen in 2023-24. Sustained policy measures from the Government of India and regulatory interventions by the RBI continue to facilitate credit accessibility, promote financial inclusion, and bolster the institutional framework. The launch of the ULI platform is expected to streamline credit delivery and enhance operational efficiencies. Simultaneously, measures such as the upward revision of collateral-free agricultural loan limits and record disbursements under schemes such as Pradhan Mantri MUDRA Yojana (PMMY) reflect the continued prioritization of small borrowers and micro-enterprises. However, asset quality remains a key monitorable. Rising delinquencies and elevated credit costs in specific geographies are exerting pressure on MFIs, particularly those operating under the JLG model. While regulatory relief by the RBI - such as the reduction in risk weights on micro-loans - is aimed at easing capital constraints and encouraging credit flow, operational risks and localized disruptions persist.
At the same time, the sector is undergoing a digital transformation, with enhanced adoption of digital tools and data-driven credit assessment methods. These innovations are expected to fortify underwriting practices and improve borrower monitoring.
Looking ahead, the Indian microfinance sector is set to expand its reach and deepen financial inclusion, while maintaining a prudent focus on sustainable growth, portfolio quality risk management, and institutional resilience.
COMPANY OVERVIEW
Satin Creditcare Network Limited (SCNL or the Company), incorporated in 1990, stands as one of Indias foremost microfinance institutions, with a firm commitment to advance financial inclusion and empowering economically active women in rural and semi-urban areas. SCNL commenced operations by extending individual loans to small business owners and transitioned into a Non-Banking Financial Company (NBFC) in 1998. In 2013, the Company was granted NBFC-MFI status, reflecting its special focus on the microfinance sector. Since 2008, SCNL has primarily operated under the Joint Liability Group, (JLG model) offering collateral-free microcredit to low income women entrepreneurs. Over time, the Company has diversified its portfolio to include loans for productivity-enhancing assets such as solar products, bicycles, home appliances, and sanitation facilities—thereby contributing to broader socioeconomic development and enhancing the quality of life in the communities it serves.
Looking at the wider microfinance ecosystem, the sector faced intensified headwinds during the year, driven by macroeconomic volatility erratic monsoons, borrower ndebtedness and inflationary pressures that impacted borrower cash flows. These external challenges led to a deterioration in asset quality across the sector, as reflected in uptick in delinquencies, including elevated PAR 1 and PAR 90 levels, higher NNPA ratios, and tighter liquidity conditions, affecting many players. While SCNL was not completely isolated from these sectoral headwinds and experienced an increase in its NNPA, PAR 1, and PAR 90 metrics compared to 2023-24, its overall asset quality remained significantly stronger than the industry average. The Company remained resilient, outperforming the broader industry and sustaining profitability. Remarkably it is the only major player in the Indian microfinance sectorto deliver 15 consecutive profitable quarters. For the full financial year, the Company posted a standalone Profit After Tax (PAT) of NR 217Crores, including INR 41 Crores in Q4 2024-25. This strong performance is attributed to its prudent underwriting standards, robust collection mechanisms, including significant recoveries from the write-off pool, technology investments, strong underwriting and deep customer connect.
Further demonstrating its operational resilience, SCNL maintained a positive Asset-Liability Management (ALM) position and a strong liquidity buffer throughout the year. The CRAR of the Company stood at 25.9%. This sound positioning enabled the Company to meet all its funding
Management Discussion and Analysis (Contd.)
obligations comfortably, even amidst a stressed operating environment. During the year, the Company welcomed 14 new lenders, underscoring the strong trust and confidence earned from its stakeholders. Besides, the Company had successfully raised a USD 100 Million syndicated social term loan via External Commercial Borrowing (ECB), further broadening and diversifying its lender base. Furthermore, the Company during the year, successfully completed its first securitization transaction worth INR 120 Crores with HSBC India.
In line with its strategic vision for diversified, sustainable growth and future-readiness, SCNL incorporated a wholly owned subsidiary, Satin Technologies Limited (STL). STL offers an advanced Human Resource Management System (HRMS) and a comprehensive Loan Management Platform, designed to enhance operational efficiency, scalability, and customer satisfaction through innovative technology solutions. Within just two months of incorporation, STL successfully onboarded two clients marking a strong start in addressing the evolving digital needs of businesses. Complementing this initiative, key leadership appointments were also made to strengthen organizational capabilities and build a future-ready management team.
Driven by its strong and calibrated performance on asset quality parameters, sound financial stewardship, proactive liquidity management, and a forward-looking approach to technology and talent, SCNL fortified its ground through resilience and strategic agility. The Company remains well- positioned to capitalize on emerging opportunities and embrace the next phase of growth in Indias microfinance sector.
Our Footprint*
29 |
MorethanA |
529 |
States and UTs |
1,00,000 |
Districts |
Villages |
||
1,568 |
33.6 Lakhs |
3.0 Lakhs |
Branches |
Customers |
Number of Centers |
*On consolidated basis
A
As on Date FigureSatin Housing Finance Limited (SHFL)
Satin Housing Finance Limited (SHFL), a wholly owned subsidiary of SCNL - incorporated in April 2017, is a professionally managed housing finance company focused on providing affordable home loans to low income families in rural and semi-urban India. Operating with a strong commitment to inclusivity and empowerment, SHFL offers affordable home loans for construction, purchase, extension, and renovation, in addition to loans against property to support entrepreneurial and income-generating needs. As of March 31,2025, the company operates through a network of 44 branches serving over 9,021 customers across 19 states. SHFL provides accessible loan products with ticket sizes up to INR 40 Lakhs and flexible repayment tenures of up to 20 years, designed to accommodate the aspirations of low and middle-income households.
SHFL continued to maintain a healthy growth trajectory, backed by the strong parentage of SCNL. As on March 31, 2025, the company reported Assets Under Management (AUM) of INR 920.0 Crores as compared to INR 755.8 Crores as on March 31 2024, registering a growth of 21.7%. SHFLs robust risk management framework enabled it to keep its Gross Non-Performing Assets (GNPA) at 2.80% and Capital to Risk-Weighted Assets Ratio (CRAR) at 52.2% as on March 31, 2025. Backed by 32 lending partners, SHFL continued to enhance the diversity and stability of its funding base in 2024-25. With an emphasis on integrity, accountability, and customer centricity, the company continues to widen its footprint and amplify its impact in Indias affordable housing finance space, empowering families to achieve their dream of owning a home.
Satin Finserv Limited (SFL)
As of March 31, 2025, SFLs on-book AUM stood at INR 515.3 Crores, up from INR 325.4 Crores, reflecting strong momentum in its core lending operations. During the year, disbursements reached INR 347.9 Crores, compared to INR 219.4 Crores in the previous year, underscoring SFLs commitment to expanding credit access for small businesses.
The companys prudent portfolio management is evident in its asset quality, with a GNPA of 4.8% and NNPA of 2.9%, alongside a robust Capital to Risk-Weighted Assets Ratio (CRAR) of 37.6%. This compares to a GNPA of 4.3%, NNPA of 2.6%, and CRAR of 48.0% in the previous year, highlighting SFLs strong capital position and sound risk management practices.
The rise in GNPA is attributable to a broader economic slowdown and various external factors that have affected customer repayment behavior, in response, the Company has implemented corrective measures such as establishing a dedicated collections team, strengthening monitoring and recovery mechanisms, and introducing an attractive onetime settlement scheme for NPA customers.
With 21 lenders on board as of March 31,2025, SFL continues to fortify its lender relationships, ensuring diversified and stable funding sources to support accelerated growth. Backed bySCNLs legacy in financial inclusion and enhanced by a seamless digital lending platform, SFL remains focused on meeting the evolving credit needs of MSMEs.
Through strategic calibration and a customer-first approach, the company is committed to driving inclusive growth and contributing meaningfully to the financial empowerment of underserved communities.
Satin Technologies Limited (STL)
Satin Technologies Limited (STL) - a wholly owned subsidiary of Satin Creditcare Network Ltd. (SCNL) - was established in August 2024. The Company has a strategic mandate to drive business transformation through innovative technology solutions. While it is a newly formed entity, STL draws strength from the deep-rooted expertise of its parent company, SCNL, in the financial services sector, STL delivers adaptable digital platforms that improve operational efficiency, enable scalable growth, and elevate customer experiences across diverse industries.
STLs initial product suite include a comprehensive Human Resource Management System (HRMS), a robust Loan Management System (LMS), and a scalable Core Banking Solution designed for small banks and cooperative societies. These solutions showcase STLs ability to deliver high-impact, enterprise-grade technology tailored to dynamic business environments.
STL has onboarded a Credit Co-operative Society as its first client for its core banking solution and has built a pipeline of prospective customers across sectors. This early traction validates the market relevance and practical value of its solutions. The launch of STL marks a pivotal step in SCNLs digital transformation journey, reinforcing its commitment to leveraging technology as a core enabler of operational excellence and long-term growth—for itself and its clients.
SCNL Offerings
| Loan Size (in INR) | Loan Tenure (in Months) | |
| Income Generation Loans (IGL) | 10,000-1,00,000 | 12-48 |
| Water and Sanitation (WASH) | 10,000-35,000 | 12-24 |
A MSME Loan |
1,00,000-15,00,000 | Max 120 |
A Lending to Corporate Institutions |
1,00,00,000-10,00,00,000 | Max 36 |
Social Impact Financing
| Solar | 2,200-4, 000 | 6-9 |
| Cycle | 5,600-7,000 | 6-12 |
| Home Appliances | 2,100-32,000 | 6-24 |
| Mobile | 11,499-21,499 | 12-24 |
A
Earlier, the Company provided MSME loans and lent to corporate institutions, but the Company is currently running down these two areas to focus on microfinance lending.PRODUCT SUITE OF OUR SUBSIDIARIES Satin Housing Finance Limited (SHFL)
SHFL offers loans for home purchase, construction, renovation, and expansion of existing homes.
Features |
Urban Home Loan | Micro Home Loan |
| Loan Range | INR 5,00,000 -40,00,000* | INR 1,00,000-7,00,000* |
| Repayment Time Period | Maximum Loan Tenure of 20 Years * | Maximum Loan Tenure of 7 Years * |
| Rate of Interest | Competitive ROI** | Competitive ROI** |
Note: *May vary on case basis, ** The company offers a range of products with interest rates varying between 9% to 25%, depending on the specific offering.
The company provides loans against property, designed as an ideal solution for urban business financing and micro home loan needs.
Features |
Urban Business Loan |
Micro Business Loan |
| Loan Range | INR 5,00,000 - 25,00,000* | INR 1,00,000 - 7,00,000* |
| Repayment Time Period | Maximum Loan Tenure of 15 Years * | Maximum Loan Tenure of 7 Years * |
| Rate of Interest | Competitive ROI** | Competitive ROI** |
Note: *May vary on case basis, ** The rate of interest ranges from 9% to 25% across SHFLs various products.
Satin Finserv Limited (SFL)
Small Ticket Business Loan
Objective |
Ticket size (in INR) | Tenor | Collateral | Eligibility Criteria |
| Income Generating Activities | 1.5 Lakhs to 3.5 Lakhs | 60 Months | Property | Minimum age: 21 years |
| Working Capital | Business stability of minimum 3 years | |||
| - Long-Term Loans (3-5 Years) | ||||
| - Short-Term Loans (1 to <3 Years) |
Large Ticket Business Loan
Objective |
Ticket size | Tenor | Collateral | Eligibility Criteria |
| Term Loans | Up to INR 5 Crores | 60 Months | Secured/ Unsecured | Business stability of minimum 3 years with the company required to be profitable as per its latest audited financial statements |
Satin Technologies Limited (STL)
Offerings
Satin Loan Management Solution
Satin Core Banking Solution
Satin Human Resource Management System (HRMS)
SCNLS CORE STRENGTHS
A Track Record of Preparedness
For over thirty years, the Company has operated on the principle that true resilience lies not only in preparedness, but in the capacity to confront challenges with resolve. Rather than retreating in the face of adversity, the Company has consistently demonstrated strategic foresight and operational strength. For the Indian microfinance sector, it was a year marked by uncertainty, shifting dynamics, and heightened client vulnerability. The environment compelled institutions to pause and recalibrate. At SCNL, we didnt wait for the disruption to unfold, we were already prepared. Whether it was demonetization, the C0V1D-19 pandemic, or the Assam crisis, our proactive mindset and disciplined execution have consistently guided us. In 2024-2025, while others were responding to the moment, we were carrying out a long-term strategy already in motion, grounded in foresight and a commitment to building a future-ready institution.
Comprehensive and Impactful Product Offerings of SCNL Group
SCNL Group offers a diverse range of products designed to meet the evolving needs of underserved communities with a primary focus on rural India. These include Income- Generation Loans (IGL), Water, Sanitation, and Hygiene (WASH) loans, and product-specific financing such as loans for bicycles, solar lamps, and other essential consumer durables. The Company provides Affordable Housing Finance through its wholly owned subsidiary, Satin Housing Finance Limited (SHFL), aimed at improving living standards. Additionally, MSME loans are extended through another subsidiary to support small businesses and entrepreneurs. Through its subsidiaries, SCNL is able to address critical financial gaps and create deeper, more meaningful impact within the communities it serves. Designed to empower disadvantaged segments and drive financial inclusion, SCNLs portfolio continues to fuel sustainable and inclusive growth.
Complementing these efforts, SCNLs subsidiary, Satin Technologies Limited (STL), has been established to operate as an independent entity, empowered with the agility to innovate and deliver cutting-edge digital solutions across multiple industries. With a strong focus on leveraging technology to drive efficiency, scalability, and enhanced customer experience, STL is well-positioned to address the evolving needs of businesses in the digital age and aspires to become a leading provider of transformative, state-of- the-art technological solutions.
Expansive Geographic Reach
SCNL leverages a strong presence across 29 states and union territories, with outreach extending to more than 1,00,000A villages, making it one of the most extensive networks in the Indian microfinance industry. Its diversified geographic footprint accelerates financial inclusion and empowers underserved communities, distinctly positioning SCNL ahead of its peers.
A
As on Date FigureAdvanced Technology Capabilities
SCNL is progressively advancing its digital capabilities by embedding Al and Machine Learning (ML) into credit underwriting, customer behavior analysis, and collections, driving faster and more accurate decision-making. The rollout of e-KYC streamlined customer onboarding, significantly reducing turnaround times and expanding reach in underserved markets.
Prudent Underwriting and Risk Assessment SCNLs underwriting framework is designed to promote responsible lending and safeguard portfolio quality. The Company has followed a one client, one loan policy to mitigate the risk of borrower over-leverage and enhance credit discipline. In addition, SCNL applies stringent eligibility norms, including the rejection of loan applications from individuals with four or more active borrowings from other lenders. Supported by robust risk assessments and credit bureau checks, these measures fortify the Companys ability to manage risks effectively and foster financial resilience.
Experienced Leadership and Governance SCNL is steered by a highly skilled Board of Directors and a seasoned management team. Their collective expertise and strategic vision propel innovation, ensure sound governance, and drive sustainable value creation for stakeholders across the business ecosystem.
Key Developments in 2024-25
• The Company recorded 6.8% growth in AUM reaching INR11,316 Crores in 2024-25, compared to INR10,593 Crores in 2023-24. The disbursement registered a 1.5% year-on-year growth, reaching INR 9,837 Crores.
• Total client base stood at 33 Lakhs as of March 2025.
• Asset quality showed marked improvement continuing the positive trend since November 2024.
o PAR 1 declined by 192 bps to 4.9% as of March 2025 from 6.8% in September 2024.
o PAR 90 stood at 3.7% as of March 2025.
• Collections against write-off pool during the year was INR 38 Crores, underlining SCNLs commitment to recovering written-off loans.
• Garnered funding from diversified sources, raising INR 7,742 Crores during the year.
o Successfully raised USD 100 million syndicated social term loan via External Commercial Borrowing, further diversifying our lender base, o The average tenure of funds raised has increased during 2024-25 to 28 months viz a viz 25.5 months in 2023-24
• Clocked a sound Capital to Risk-Weighted Assets Ratio (CRAR) of 25.9%, showcasing a solid capital base to support business continuity.
• Received "SQS2" Sustainability Quality Score from Moodys Ratings for our Social Financing Framework that is among the highest ratings awarded within the BFSI sector.
Funding Profile
SCNL continues to strengthen its funding framework through well-calibrated diversification across instruments and lender categories, enhancing stability and downsizing concentration risk. On the product side, Term Loans & PTCs remained the backbone of the funding mix at 48.6%, while Direct Assignments at 22.5% and NCDs at 17.5% gained prominence, along with channels, like ECB at 10.9%. On the lender side, bank funding dominated at 63.1%, but participation from overseas funds at 20.5%, NBFCs at 10.0%, and domestic institutions at 6.4% signaled growing market confidence and access to a broader lender base. Product-wise (in %) 0.6%
FINANCIAL OVERVIEW
SCNL recorded a revenue of INR 2,377 Crores in 2024-25, reflecting a 16% year-on-year growth. Profit After Tax (PAT) for the year stood at INR 217 Crores including INR 41 Crores in Q4, registering 15,h consecutive profitable quarter despite sector headwinds. The Company maintained a steady net nterest margin of 13.0% during the year. These margins reflect a stable performance in the year marked by sectorwide pressure, where MFIs have faced narrowing spreads due to asset quality challenges and declining yields. Credit costs stood at 4.6%, resulting to a Return on Assets (RoA) of 2.1 % and Return on Equity (RoE) of 7.9% in 2024-25.
Key Financial Ratios
(In %)
Particulars |
March 31, 2025 | March 31,2024 |
| Gross Yield | 21.70 | 22.14 |
| Financial Cost Ratio | 8.67 | 8.99 |
| Net Interest Margin | 13.03 | 13.15 |
| Operating Expenses Ratio | 6.31 | 5.60 |
| Loan Loss Ratio | 4.59 | 1.44 |
| RoA | 2.07 | 4.77 |
| RoE | 7.86 | 18.46 |
| Leverage (Total Debt/ Total Net Worth) | 2.77 times | 2.73 times |
| Cost to Income Ratio | 48.41 | 42.59 |
• Gross Yield: Represents the ratio of Total Income generated during the relevant period to the Average AUM.
• Financial Cost Ratio: Denotes the ratio of Finance Cost incurred during the relevant period to the Average AUM.
• Net Interest Margin (NIM): Signifies the difference between the Gross Yield and the Financial Cost Ratio.
• Operating Expenses Ratio: Depicts the ratio of Operating Expenses (including depreciation but excluding Credit Cost and Finance Cost) to the Average AUM.
• Loan Loss Ratio: Expresses the ratio of Credit Cost (including FLDG on BC) to the Average AUM.
• Return on Assets (RoA): Symbolizes the ratio of Profit After Tax (PAT) to the Average Total Assets.
• Return on Equity (RoE): Demonstrates the ratio of Profit After Tax (PAT) to the Average Equity.
Human Resource Management
At SCNL, people are central to every milestone achieved. During the course of purposeful progress in 2024-25, the Companys Pluman Resources efforts remained rooted in building an inclusive, future-ready workforce that fuels both organizational growth and social impact. Guided by the conviction that empowered individuals drive enduring change, SCNL stayed focused on promoting diversity and inclusion during the year through multiple interventions. These included targeted hiring drives, setting up of allwomen branches, and progressive initiatives such as extended parental leave and menstrual leave under the Satin Ease1 banner. Complemented by holistic wellness and safety programs, these endeavors reflect SCNLs commitment to foster a workplace - defined by dignity, empathy, and empowerment.
SCNL reinforced its focus on capability building through a centralized Learning & Development framework designed to upskill employees at every level. This included a blend of e-learning modules, role-based training, mentoring programs, and managerial development initiatives. The onboarding process was also revamped with the launch of an in-house digital module, facilitating a smoother and more engaging transition for new employees. Further strengthening its people-first culture were the initiatives like Satin Shagun, which honored the families of new joiners, exemplifying SCNLs commitment to respect, warmth, and family values.
Employee health, safety and welfare were the priorities throughout the year. Regular health check-ups, comprehensive insurance coverage, and mental wellness programs further demonstrated SCNLs commitment to holistic employee well-being. The Satin Sahyog initiative continued to provide compassionate support to the families of deceased employees dueto unforeseen loss. As part of this initiative, the Company offers monthly financial assistance, financial aid for medical needs, educational support for children, and facilitates employment opportunities for eligible family members.
During the year, in line with the policy framework, support was extended to the families of field employees who lost their lives due to unforeseen circumstances. A monthly support of INR 10,000 was provided to the nominee to ensure financial stability. Additionally, where the deceased had dependent children, an educational allowance of INR 2,500 per child (up to two children) was granted to support continued schooling.
By synergizing inclusive hiring practices, continuous development initiatives, a performance-driven culture, and a firm focus on employee welfare, SCNL continues to be an employer of choice. Nurturing talent and driving positive change across the communities it serves, the Company remains dedicated to building a purpose-driven, peoplecentric organization. This commitment extends not only to the external communities we impact but also to our internal teams. We actively invest in identifying and nurturing internal talent, providing meaningful growth opportunities, structured career development, and a supportive environment that empowers employees to realize their full potential and grow along with the organization.
15,189
Total Permanent Employees
28.2 Years
Average Age
54.02%
Retention Rate
We take great pride in being recognized as a leading financial services organization and an exceptional workplace. For five consecutive years, we have been certified as a Great Place to Work?, reflecting our strong organizational culture and employee-centric values.
In 2025, we were honored with several prestigious accolades by Great Place to Work? Institute:
* Indias Top 100 Best Companies to Work For 2025 - Rank 57th
* Indias Best Workplaces™ in Microfinance 2025
* Indias Best Workplaces™ in BFSI 2025 - Top 25
* Indias Best Workplaces™ in Health & Wellness 2024 - Top 50
These recognitions affirm our commitment to building a positive, inclusive, and growth-oriented work environment.
TECHNOLOGICAL UPGRADATIONS
SCNL embarked on a significant digital transformation journey in 2016-17, moving away from the legacy BIJLI application and developing its proprietary Enterprise Resource Planning (ERP) system. This shift aimed to overcome architectural limitations, improve scalability, and enable real-time operations.
Centralized Architecture and Infrastructure Modernization
• Legacy Limitation: BIJLIs decentralized model led to processing delays of up to 15-20 days.
• ERP Advancement: Migration to a centralized architecture enabled:
o Real-time data capture across branches, o Dashboards with auto-refresh every 2 minutes, supporting agile decision-making, o Tablet-based field transactions, fully synchronized
with backend systems.
• Database & Hardware: Upgraded to Oracle DB, enhancing performance and data integrity. Hardware infrastructure was refreshed with SSD-based highspeed storage and enterprise-grade servers.
• Offline Capability: Android application designed for both online and offline functionality; capable of storing and syncing up to 15 days of data without internet access-crucial for rural operations.
Real-time Data Analytics & Dashboards
• I mplementation of a real-time analytics engine to: o Deliver up-to-date operational insights.
o Monitor and track KPIs across field, branch, regional, and corporate levels, o Enable proactive business decisions using granular data and visual dashboards.
Geo-fencing and Location Intelligence
• Integration of GPS-based geo-fencing to:
o Map customer addresses with high precision, o Track field personnel activities in relation to customer locations.
o Derive business density analytics across
geographic clusters for resource optimization.
Al and ML Integration in Field Operations
• Embedding AI/ML models within the mobile app to:
o Validate and enhance the quality of KYC documentation.
o Auto-check for legibility, completeness, and regulatory compliance.
o Streamline back-office verification and reduce rejection rates.
Digital and Cashless Collections
• Multi-mode digital payment integration to promote financial inclusion:
o NEFT, IMPS, Debit Cards o QR Code-based payments
o Aadhaar Enabled Payment System (AEPS)
o Bharat Bill Payment System (BBPS) o UPI 2.0
• Improved customer convenience, reduced cash handling risk, and enhanced collection efficiency.
AWS Cloud Adoption
• Transitioned to Amazon Web Services (AWS), bringing: o On-demand scalability and cost-efficiency.
o Enhanced security posture, reliability, and uptime.
o Integration with AWS data lakes, analytics, and ML services to drive:
• Predictive analytics.
• Customer segmentation.
• Risk modelling and fraud detection.
o Supported SCNLs journey towards a fully digital and customer-centric enterprise.
Cybersecurity Framework Enhancement
• Deployment of a multi-layered cybersecurity ecosystem:
o Firewall & Intrusion Detection/Prevention
Systems (I DPS)
o Endpoint Protection (EDR/AV solutions) o Patch and Vulnerability Management Processes, o Regular Security Audits and Adherence to Data Protection Best Practices, o SOC and SIEM Solution
o DLP, Proper Endpoints and Encryption mechanism.
The Company received AUA/KUA licenses from UIDAI in 2024-25, enabling seamless e-KYC transactions through a fully digital and automated verification process.
Internal Control and Adequacy
SCNL instituted a robust framework of internal financial controls, tailored to the scale, complexity, and evolving nature of its operations. This framework is designed to ensure the orderly and efficient conduct of business, while safeguarding the Companys assets from unauthorized use, fraud, and misappropriation. By enforcing strict adherence to internal policies and procedures, SCNLs control mechanisms help in preventing errors and uphold the accuracy and completeness of accounting records. This disciplined approach, embedded across all operational layers, enables the timely preparation of reliable financial disclosures, fostering transparency, accountability, and financial integrity. Supervision of the internal control environment is provided by the Audit Committee of the Board of Directors, comprising Non-Executive Directors. The Committee plays a key role in evaluating the adequacy and effectiveness of these internal controls. It periodically reviews internal audit reports, addresses critical findings, and ensures compliance with regulatory requirements. Regular engagements with the statutory auditors enhance confidence in the Companys financial systems and reporting practices.
SCNL implemented a comprehensive risk-based internal audit process, supported by a dedicated in-house Internal Audit department. Guided by an annual risk-based audit plan that prioritizes high-risk areas, the Company ensures rigorous coverage of its operations. Field audits of branches and regional offices are typically conducted three times a year, while corporate function audits are carried out at predefined intervals. These structured audits offer critical insights that help identify, manage, and mitigate risks, while maintaining high portfolio quality. On the technology front, SCNL continues to modernize its infrastructure. It undertook sustained investment to ensure complete computerization across its operations, including accounting and MIS functions. The Company deployed advanced information security controls, such as firewalls, intrusion prevention systems, and endpoint security software to safeguard its digital assets from cyber threats and unauthorized access. The successful implementation of cloud-based systems further enhanced system scalability, reliability, and secure data management, in recognition of its stringent information security standards, SCNL received the ISO 27001:2022 certification following a rigorous two-stage audit process, covering documentation review and control testing by third-party auditors. An annual surveillance audit is also conducted to retain this certification, underscoring SCNLs commitment to protecting the confidentiality, integrity, and availability of its data. The ISO certification reinforces the Companys proactive approach to mitigating potentia security threats and strengthens stakeholder confidence in its operational resilience.
SCNLs risk management framework is further fortified through the operations of its Centralized Shared Services Center (CSS) - playing a critical role in the verification and authentication of loan applications and KYC documents. By ensuring stringent customer onboarding processes, the CSS unit reduces the likelihood of adverse customer selection and amplifies the overall quality of loan disbursement. By thoroughly validating the authenticity of client information, SCNL enhances its operational vigilance and ensures compliance with regulatory guidelines. Continued investment in IT systems, including robust backup mechanisms and cybersecurity controls, empowers the Company to significantly improve its decision-making processes, operational efficiency, and customer service standards. With firm focus on maintaining high standards of governance, internal controls, and risk management, SCNL remains on course to achieve its sustainable growth objectives.
RISK MANAGEMENT
SCNL upholds the critical importance of risk management within its strategic and operational framework. Given the Companys focus on lending to financially underserved and economically vulnerable segments, prudent risk oversight is central to ensure long-term sustainability, protect stakeholder interests, and maintain portfolio quality. To this end, SCNL implemented a robust, enterprise-wide risk management system that identifies, assesses, monitors, and mitigates various risks associated with its operations. This structured process enables SCNL to proactively address potential risks across credit, operational, reputational, compliance, and market domains. An integrated set of tools, policies, and risk control measures, supported by advanced analytics and technology platforms, enables the Company to manage risk exposure effectively. SCNLs risk governance structure is anchored by the Board-level Risk Management Committee, which provides oversight and strategic direction. This ensures a disciplined approach to risk management practices, aligned with regulatory guidelines and industry best practices.
SCNLs risk evaluation framework adopts a contextual, multi-dimensional approach to assess the risk exposure of its lending portfolio. Key factors include reputation risk, the inherent nature of the product or loan, credit risk, and historical performance of similar customer profiles. Additionally, the tenure of the borrowers relationship with SCNL, their repayment track record, future income potential, and prevailing competitor interest rates are analyzed to determine appropriate risk premium. These risk assessments allow the Company to strike a balance between growth and asset quality. To further bolster its risk posture, SCNL conducts regular risk audits, stress testing, and early warning analytics. These mechanisms provide real time insights, enabling prompt corrective actions. Through its full-spectrum risk management strategy SCNL aims to safeguard asset quality ensure financial resilience, and deliver enduring value to all stakeholders.
Comprehensive details regarding the Companys risk mitigation strategies can be found on page no. 58 of this Integrated Report.
CORPORATE GOVERNANCE
At SCNL, robust governance is a strategic enabler that supports the Companys operations, decisions, and longterm vision. The Company implemented a comprehensive governance framework that emphasizes transparency accountability and ethical business conduct. Led by a seasoned and diverse Board of Directors, SCNL ensures strict adherence to regulatory guidelines and internal policies, encompassing a host of critical areas. These include ncome recognition, asset classification, provisioning norms, and dividend distribution. These governance practices are deeply embedded within the organizational culture, ensuring responsible decision-making and fostering long-term stakeholder trust.
This strong governance ethos of SCNL was exemplified in the successful closure of a USD 100 Million syndicated social loan in 2024-25, arranged by Standard Chartered Bank in collaboration with 6 Sri Lankan lenders. This significant achievement highlighted the Companys financial resilience and reinforced investor confidence in its transparent governance and risk management systems. By upholding the highest standards of oversight through its well-defined Audit and Risk Committees, while continuously evolving its frameworks in line with global best practice, SCNL remains committed to responsible governance.
Reserve Bank of India (RBI): Compliance
SCNL, classified as a Systemically Important Non-Deposit Taking Non-Banking Financial Company (NBFC), maintains strict adherence to the regulatory framework prescribed by the RBI. With the introduction of the Scale-Based Regulatory (SBR) Framework by the RBI in October 2023, SCNL operates under the Middle Layer category as per the Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023. This consolidated framework replaced various earlier guidelines and streamlined the regulatory provisions applicable to different categories of NBFCs, ensuring a uniform and risk- based approach across the sector.
SCNL rigorously follows all RBI directives relevant to its classification. These include adherence to qualifying asset criteria, asset classification and provisioning norms, credit pricing, capital adequacy requirements, and regulations related to multiple lending and over-borrowing. As part of its commitment to regulatory compliance, the Company also implemented measures to ensure fair practices and responsible lending, as outlined by the RBI. Demonstrating its prudent approach to liquidity management, SCNL sustained a Liquidity Coverage Ratio (LCR) of 130.40% as of March 31, 2025 - significantly exceeding the RBIs minimum threshold of 100%. This stands as a clear demonstration of SCNLs proactive alignment with the evolving regulatory landscape, financial discipline, and operational resilience.
Corporate Social Responsibility (CSR) and Social Performance Management (SPM)
At SCNL, CSR is embedded as a core component of the Companys broader mission to uplift lives, advance gender equality empower underserved communities, and promote nclusive and sustainable growth. Guided by a robust CSR policy and aligned with Schedule VII of the Companies Act, 2013, the Company prioritizes community welfare, environmental protection, and social development.
In line with its vision of holistic community empowerment, SCNL actively engages in strategic partnerships with qualified trusts and foundations to implement its CSR programs. Since 2021-22, SCNL is associated with GNA University to promote education among underprivileged children. During the year under review, the Company further strengthened its partnership through its continuous support by supporting underprivileged students through scholarships and infrastructure development initiatives. Furthermore, the Company provided funding to the PHD Rural Development Foundation, a trust established in 1981 under the aegis of the PHD Chamber of Commerce & Industry, New Delhi. The Foundation is also empaneled with the Government of India through NITI Aayogs NGO Darpan platform. The initiative supports an integrated model aimed at improving access to water. Beyond these CSR activities, SCNL further deepened community engagement during the year through targeted efforts across key areas. In collaboration with the Reserve Bank of India (RBI) and industry Self-Regulatory Organizations (SROs), the Company conducted 48 financial literacy workshops across multiple states. These workshops focused on educating clients about responsible financial planning, the importance of saving, and the basics of investing.
In parallel, SCNL organized 36 health camps in flood- affected regions, offering essential healthcare services to underserved populations. The Company also extended critical disaster relief, reaching over 21,000 individuals across five states.
These initiatives are aligned with the core principles of the United Nations Sustainable Development Goals (SDGs), with a focus on financial empowerment, health, inclusive growth, and community resilience. Through sustained engagement, SCNL continues to create meaningful and lasting impact in the communities it serves.
Our community engagement initiatives are centered around the fundamental principles of the Sustainable Development Goals (SDGs).
INR 283.66 Lakhs
CSR Spend
28,953
Lives Touched through CSR and SPM Activities
Comprehensive details of the Companys Corporate Social Responsibility initiatives can be found in the Social and Relationship Capital section on page no. 88 of this Annual Report.
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