10 Leading Microfinance Companies in India 2022

Updated On : April 2022

India has been progressing economically over the last few years and microfinance companies have played a huge role in alleviating poverty, especially among women, the rural youth, and the poor, uplifting them and bringing them formal channels of credit. Microfinance has become a hugely successful concept in India, with hundreds of microfinance companies changing the landscape of the financial lending industry for the low-income population.

Microfinance was first introduced to India in 1978 with the country’s first microcredit institution. MFIs were set up to provide people with small affordable loans for short-term financing needs. Microfinance is meant for people in the lower-income bracket to help achieve self-sufficiency.

Microloans help the unbanked and marginalized people in semi-urban areas and rural areas where banks and formal banking services are out of reach. Microfinance helps rural communities, women, and people who are involved in agricultural and small business activities.

What are Microfinance Companies

Microfinance companies are non-banking finance companies that are registered with the Reserve Bank of India (RBI) and offer short-term loans at lower interest rates. They focus on rural or semi-urban areas where people need money urgently. They work closely with women entrepreneurs helping them start small businesses and also lending o MSME for housing and dairy businesses. 

Microfinance companies play a vital role in the development of rural areas by providing loans to people facing financial constraints and helping them start or maintain their businesses. Microfinance companies in India are trying to bridge the social-economic gap between rural and modern India, by bringing in amenities like sanitation, solar electricity, and water.

The 10 Leading Microfinance Companies in India

  • Equitas Small Finance Bank

    Equitas Small Finance Bank which was originally called Equitas Micro Finance Ltd. is headquartered in Chennai, Tamil Nadu. It is a wholly-owned subsidiary of Equitas Holdings Ltd. and was established in India in 2016 to provide microcredit to the underprivileged sections of society who couldn’t avail of loans from mainstream banks or financial organisations. The company aimed to make finance available at a fair cost and to produce decent returns on investment to attract mainstream capital continually.

    Having pioneered the concept of small finance in the country, Equitas has a network of over 400 branches in 22 states and 2 union territories. The first Small Finance Bank to be granted a banking license by RBI, Equitas is India’s largest organized microcredit institution by branch network and customer base.

  • Fusion Micro Finance Limited

    Fusion Micro Finance Limited was founded in 2010 and provides loans to micro-businesses and entrepreneurs, who are unable to access loans due to a lack of collateral. The company is a pioneer in microcredit and provides financial services like short-term working capital loans, loans against property, gold loans, and various insurance products. It has grown to become a leading microfinance institution in India by lending over INR 1.3 billion. After empowering women to become financially independent, the company plans to launch Shubh-Karya, a housing finance scheme, where they will provide loans to individuals and institutions to buy or construct a house.

  • Annapurna Finance Private Limited

    Annapurna Finance Private Limited, founded in 2009 in Odisha, has a loan portfolio of INR 70 crore (USD 12 million). It focuses on the poor, offering them a wide range of financial products and services including loans, deposits, and insurance, to help them establish sustainable livelihoods.

    It especially aims to empower women in remote villages who have no access to retail banking or have been unable to procure a loan due to a lack of collateral. The company provides these women with collateral-free loans enabling them to earn more and lead self-reliant lives.

    Annapurna Microfinance serves approximately 50,000 customers across the country.

  • Bandhan Financial Services Private Limited

    Bandhan Bank is India’s first microfinance institution that transitioned into a universal bank focusing on the underbanked and underpenetrated sectors.

    Bandhan Konnagar was established in 2001 as an NGO to provide microfinance services to financially and culturally disadvantaged women in rural West Bengal. Bandhan Financial Services Limited (BFSL) started microfinance operations in 2006 and acquired the NGO’s microfinance operations in 2009, thus, taking over the whole microfinance company.

    The bank provides banking services and products including a wide range of asset and liability offerings for both micro banking and conventional banking. Bandhan Bank has 5310 overall banking outlets as of 31st March 2021.

  • Arohan Financial Services Limited

    Arohan began microfinance operations in 2006 in Kolkata but was eventually bought by IntelleCash Microfinance Network Company Pvt Ltd with 56% stakes in September 2012. Among the products that Arohan provides to financially disadvantaged customers are - credit products like income-generating loans and other loans for household purposes, and insurance products including healthcare and life insurance covers through Indian insurance companies that Arohan has tie-ups with.

    Arohan also offers term loans to microfinance institutions. Arohan Financial Services Limited is the largest NBFC MFI in eastern India and is a subsidiary of The Aavishkaar Group. It has been certified as one of the Best Workplaces in Microfinance India 2020.

  • Ujjivan Financial Services

    Ujjivan Financial Services was established in 2005 in Bangalore. It is a non-banking financial company that provides a range of financial services to the underprivileged. In February 2017, Ujjivan Financial Services set up the Ujjivan Small Finance Bank to offer banking and microfinance services to the country’s economically deprived sector.

    Ujjivan Financial Services today has 469 branches all over the country and is one of the largest microfinance companies in India.

  • Asmitha Microfin Ltd.

    Asmitha Microfin Ltd. founded in 2002 is considered one of the best microfinance companies in India. Headquartered in Hyderabad, it aims to provide small loans to the poor village women to start a small businesses and become self-reliant. With its presence in 13 states of India, the sole aim of Asmitha Microfin Ltd is to help women living below the poverty line who don’t have the access to traditional banks and uplift their lives.

  • Muthoot Microfin Limited

    Muthoot Microfin Limited is part of the Muthoot Pappachan Group. It focuses exclusively on providing microloans to rural women entrepreneurs in lower-income households. The company’s portfolio includes income-generating assets like loans for dairy, life improvement loans like education, mobile, solar loans, and Health and hygiene loans for water and sanitation purposes.

  • Spandana Sphoorty Financial Ltd.

    Spandana Sphoorty Financial Ltd. headquartered in Hyderabad is one of the most reputed microfinance companies in India. It was founded in 1998 and provides a range of loans such as Income Generation Loan, Small Ticket Personal Loan, Micro-Enterprise Loan, Group loans, and Gold loans.

    Spandana Sphoorty Financial Ltd. caters exclusively to financially backward women and enables them to live a respectable and sustainable life.

  • Suryoday Small Finance Bank

    Suryoday Small Finance Bank headquartered in Mumbai was founded in 2008. Formerly known as Suryoday, it started as a Microfinance institution and grew into a small finance bank. It is one of the leading small finance banks (SFBs) in India, focussing on customer needs, and providing access to funding for the unbanked and underbanked segments. Its customer-centric ideology goes on to create a strong and lasting relationship with clients.

    With a net worth of 500 crores, the Suryoday Bank offers a wide variety of loans including finance loans comprising loans to joint liability groups, commercial vehicle loans, housing loans, secured business loans, micro-business loans, and other loans

MFIs today are making a great impact, providing services to millions of Indians and enabling them to get loans at affordable interest rates. Thus, microcredit institutions are lucrative in India though they are heavily dependent on funding. Banks are currently among the largest providers of microfinance with MFI-turned-banks continuing to be the primary source. With financial inclusion increasing, the future looks bright for MFIs with years of opportunity ahead of them.

Leave Comments :

Send Enquiry

Don't miss updates from us!

Subscribe to our Blogs

Send Enquiry