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Microfinance shows early recovery signs, but legacy bad loans weigh on sector

After two years of stress, micro-lenders tightened credit and reduced high-risk multiple borrowing, while repayment performance improved in FY26. The sector’s loan book shrank, and legacy defaults worsened. Sa-Dhan says the recovery is fragile, citing below-normal rainfall, and renewed inflation.

Livemint 8/10/2026, 4:32:52 pm IST

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