Research Report

Asset quality shows signs of stabilisation but remains monitorable in light of sociopolitical developments; ICRA expects temporary disruption in operations and collections in Bihar. ICRA anticipates muted AUM growth for NBFC-MFIs in FY2026, followed by a rebound to 15-17%, driven by eased qualifying asset criteria and the expectation of improved asset quality. Profitability is likely to improve in FY2027 amid moderation in credit costs, with NBFC-MFIs projected to report a RoMA of 1.9-2.2%.  Delinquencies have started to stabilise with the 90+ dpd remaining steady in Q3 FY2026 while the 0+ dpd declined by 60 bps. This was largely owing to significant write-offs and portfolio sales to ARCs by NBFC-MFIs, though there was a gradual improvement in their collection efficiency as well curbing forward flows into the overdue buckets.

Exhibit: Trend in delinquencies of NBFC-MFIs (ICRA’s sample set of companies*)

Source: ICRA Research; E – Estimated; dpd – Days past due; *ICRA’s sample set of companies consists of 22-26 MFIs at different months, contributing 80-90% to the AUM of NBFC-MFIs