Telangana has emerged as a `strong’ and evolving microfinance ecosystem, with over 90 per cent of borrowers contributing to household income and 79 per cent of the borrowers reporting installation of digital payment applications, according to a study by the Microfinance Industry Network (MFIN) in collaboration with the National Council of Applied Economic Research (NCAER).

Based on a survey of over 10,000 borrowers across 10 states, the study shows microfinance in Telangana continued to play a `critical’ role in enabling livelihood creation and enterprise growth. 

Over 94 percent of loans across surveyed markets were being utilised for productive purposes such as small businesses, trade, and agriculture-linked activities, as per the study.

“The key takeaway from this study is the clear shift towards formal credit, with a sharp decline in reliance on informal sources and improved borrower outcomes. At the same time, there is a need to further strengthen credit assessment, particularly around household cash flows, to mitigate risks of over-indebtedness,’’ Alok Misra, CEO & Director, MFIN, said in a release on Tuesday.

“The positive trends in borrower engagement, savings behaviour and productive use of loans reinforce the sector’s role in supporting livelihoods. Going forward, continued focus on financial awareness, responsible lending and digital adoption will be critical to deepen financial inclusion,’’ he added. 

V Anantha Nageswaran, Chief Economic Advisor, Govt. of India remarked “The findings of this NCAER-MFIN study covering over 10,000 borrowers across 10 states give us every reason to feel encouraged and every reason to be ambitious. Microfinance institutions today have a strong relationship of trust with millions of borrowers.’’

Overall, borrowers in Telangana maintain manageable levels of indebtedness, with most holding one or two loans and repayment obligations remaining within regulatory thresholds.

Combined with strong income participation, productive utilisation of credit, and increasing formalisation of borrowing, these trends position Telangana as a well-rounded and high-performing microfinance market contributing to inclusive growth, the release said. 

Published on April 21, 2026