Bhopal: Madhya Pradesh is witnessing the
growing role of microfinance in supporting livelihood generation and
strengthening household financial participation, according to a study by the
Microfinance Industry Network (MFIN) in collaboration with the National Council
of Applied Economic Research (NCAER). Borrower households in the state report
monthly per capita expenditure (MPCE) of ₹2,594, with food expenditure at ₹1,053
and average monthly savings of ₹2,637, reflecting steady engagement
with formal financial systems and disciplined financial behaviour.
The
study highlights that microfinance is closely linked to income-generating activities
in the state, with a majority of borrowers utilising credit for agriculture,
allied activities, and small-scale enterprises. This underscores the role of
microfinance in enabling self-employment and supporting local economic
activity.
A
key trend emerging from the study is the role of microfinance in enabling home-based and mobility-linked enterprises, supported by asset ownership
patterns. With 87.8% of households owning two-wheelers and 40.3% owning sewing
machines, borrowers are increasingly leveraging credit to support
income-generating activities that are locally anchored and scalable within
their means.
The
report also reflects consistent savings behaviour among borrower households,
with average monthly savings of ₹2,637, highlighting improving
financial awareness and the ability to manage income, expenditure, and credit
effectively.
A
continued shift towards formal financial systems is evident, with borrowers
increasingly accessing regulated credit channels, strengthening transparency
and expanding access to structured financial services.
Digital
adoption is gradually evolving, presenting an opportunity to further enhance financial
access and improve transaction efficiency as mobile-based platforms continue to
expand.
Dr.
Alok Misra, CEO & Director, MFIN, said: "The key takeaway from
this study is the clear shift towards formal credit, with a sharp decline in
reliance on informal sources and improved borrower outcomes. At the same time,
there is a need to further strengthen credit assessment, particularly around
household cash flows, to mitigate risks of over-indebtedness. The positive
trends in borrower engagement, savings behaviour and productive use of loans
reinforce the sector’s role in supporting livelihoods. Going forward, continued
focus on financial awareness, responsible lending and digital adoption will be
critical to deepen financial inclusion.”
Dr.
V Anantha Nageswaran, Chief Economic Advisor, Govt. of India
remarked “The findings of this NCAER-MFIN study covering over
10,000 borrowers across 10 states give us every reason to feel encouraged and
every reason to be ambitious. Microfinance institutions today have a strong
relationship of trust with millions of borrowers. This creates an opportunity
to go beyond credit by strengthening financial literacy, improving awareness
and supporting income enhancement through skilling and other interventions.
Leveraging this engagement effectively can play an important role in advancing
sustainable livelihoods and improving household resilience.”
Overall,
the findings highlight that microfinance is playing a pivotal role in
supporting livelihood creation, enabling enterprise activity, and strengthening
the financial foundation of borrower households in Madhya Pradesh, with
continued potential for growth in income generation and financial inclusion.