Tamil Nadu has highest average outstanding loan amount per account in microfinance sector
Bihar continues to be the largest state in terms of portfolio outstanding followed by Tamil Nadu and Uttar Pradesh in the microfinance sector. Among the top 10 states, Tamil Nadu has the highest average loan outstanding per account of ₹31,131 followed by West Bengal at ₹30,488, as per the data.
'Tamil Nadu is one of the oldest states with microfinance presence. The loan size and loan outstanding in the past was generally a factor of client vintage and their repayment performance and with every new cycle a borrower would get a higher loan amount. So naturally, the client vintage in Tamil Nadu is higher than other states and which explains the higher average loan outstanding,' Alok Misra, CEO and Director, MFIN, said.
Tamil Nadu's Gross State Domestic Product (GSDP) for the financial year 2024-25 is estimated at ₹17.23 lakh crore, according to the Union Ministry of Statistics and Programme Implementation and is the 2nd ranked state in terms of contribution to the GDP of India. Further as per Economic Survey of Tamil Nadu 2024-25, Per Capita Income of Tamil Nadu in 2022-23 was ₹2.78 lakh, 1.6 times the national average of ₹1.69 lakh and was ranked as the fourth-largest state in terms of per capita income, he pointed out.
This also shows a higher loan absorption capacity of microfinance borrowers in the state, which reflects in the high average loan outstanding per account. Still then it is only marginally higher than the All India average loan outstanding of ₹28,285, Mr. Misra said.
'Among the top 10 states with the highest outstanding loans, four—Bihar, Tamil Nadu, West Bengal and Karnataka have above average outstanding loan amount. While the differences among these states are relatively narrow, Tamil Nadu stands out with the highest average outstanding loan amount. This is largely driven by a consistent trend of higher disbursements in larger loan sizes in recent months. Additionally, the growing credit maturity of Microfinance Institution (MFI) borrowers in Tamil Nadu has further contributed to this trend,' Ramkumar Gunasekaran, Director and Head of Sales, CRIF High Mark, a credit bureau.
The Gross Loan Portfolio (GLP) of the microfinance industry in Tamil Nadu stood at ₹46,689 Crore as on March 31, 2025.
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