Ahead of the Union Budget 2026-27, Dr. Alok Misra, CEO & Director of the Microfinance Industry Network (MFIN), has called for significant policy support to strengthen the microfinance landscape in India. Highlighting that the sector impacts the lives of nearly 30 crore low-income individuals, Dr. Misra emphasized the need for a robust KYC framework and responsible credit reporting to ensure accurate borrower verification.
Addressing the regulatory challenges following the Supreme Court judgment on Aadhaar, Dr. Misra suggested implementing solutions like Aadhaar last-four-digit storage or tokenization to streamline verifications. He also raised concerns regarding the sector's high dependence on bank funding, noting that sudden liquidity crunches—as witnessed over the past year—have pushed nearly 50 lakh clients out of the formal financial fold. He urged the government to establish a more stable and diversified funding mechanism for NBFC-MFIs.
Despite these challenges, Dr. Misra noted a tangible improvement in credit discipline across the sector. The 'Portfolio at Risk' (1–90 days) for RBI-regulated entities has seen a sharp decline from 5.3% in December 2024 to 2.4% by the end of December 2025. Additionally, 96% of borrowers now operate within the prescribed MFIN guardrails. The industry remains optimistic about an early announcement regarding the proposed credit guarantee scheme for microfinance, which is expected to bolster lender confidence and trigger a virtuous growth cycle for the sector.