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Improving collections across lenders marks early recovery in MFIs

ICICIdirect Research 23 Jan 2026 DISCLAIMER

The microfinance sector is showing early signs of recovery, reflected in improving collection efficiency (CE) and easing delinquency trends. L&T Finance and CreditAccess Grameen have indicated improving collection efficiency across regions including Karnataka.
Signalling normalisation in repayments, L&T Finance reported collection efficiency improving to 99.7%, while CreditAccess Grameen also demonstrated a sharp recovery, particularly from Dec’25 onwards wherein collection efficiency improved to 99.71%, with sustained behaviour in Jan’26.
Along with improvement in asset quality, MFI players are witnessing a pick-up in disbursement post 6 quarters of continued moderation in AUM. L&T Finance, witnessed a sequential growth of 6.7% in rural finance segment (which comprises of MFI business) while CreditAccess Grameen reported 8.4% QoQ growth in disbursement and 2.6% QoQ uptick in AUM, with strong disbursement in December (₹2,200 crore in Dec’25). 
Management commentary now suggests a clear shift from asset quality stabilisation to growth focus, with CreditAccess guiding for better momentum in Q4, backed by improving collections and stronger borrower acquisition trends in December. The improving CE trajectory across L&T Finance and CreditAccess Grameen reinforces the view that microfinance sector stress is bottoming out.

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