Microfinance Market

Market Overview

Microfinance is a type of financial service that low-income groups and individual ineligible for conventional financing options can obtain to satisfy their needs. Apart from lending smaller amounts to borrowers with easy eligibility conditions, many financial institutions also offer micro-savings accounts to benefit the account holders. The goal is to make impoverished people financially self-sufficient. Apart from SME loans, borrowers can also obtain instant Personal Loans to fulfil their personal needs like education, home renovation, medical emergency, vacation, or wedding. Recognizing area of the existing policies to cater to inferior people’s needs, the Indian government took steps to reduce their financial dependence on unorganized sectors. There are small-size, short-duration loans available without security and lengthy application procedures. it provides economic resilience, helping individuals and business owners work effectively and alleviate poverty. Business owners can use these loans to run and expand their businesses and accumulate capital for future needs. Since those looking for smaller loans do not attract the interest of most lenders, small loan sanctions from microfinance are great steps to gain financial independence. Female borrowers get better interest rates on these loans due to their higher sense of responsibility, loyalty, and honesty. Unemployed and disabled people and those who do not qualify for conventional loans can receive these loan products from MFIs.

Microfinance Market Size

Report	Details
Market Size Value	USD 9.35 billion in 2024
Market Size Value	USD 13.3 billion by 2030
CAGR	CAGR of 5.2%
Forecast Period	2024-2032
Base Year	2023
Historic Data	2020
Segments Covered	Providers, End-use, Purpose, Tenure and Region
Geographics Covered	North America, Europe, Asia Pacific, and RoW

Microfinance breaks the cycle of financial crunch in a family or business and makes more money available, helping them meet their basic needs and improve their well-being. When entrepreneurs borrow microfinance, they create more employment opportunities in the economy and help the nation develop faster. helps people obtain loans without pledging any asset as security. The importance of microfinance, eligible applicants can enjoy the benefits with hassle-free procedures and minimal paperwork, enabling them to gain self-dependence quickly.

Major vendors in the global Microfinance Market are 51Give, Al Amana Microfinance, Al Rajhi bank , Al-Barakah Microfinance Bank, Alinma bank, Annapurna Finance (P) Ltd, Asirvad Microfinance Pvt. Ltd., Banco do Nordeste do Brasil S.A., Bank Albilad, Bank Rakyat Indonesia, BRAC, BSS Microfinance Ltd., Grameen Foundation, Kiva, Riyad Bank and others.

Additional consideration apart from savings

The poor exhibit resourcefulness by employing various informal savings methods, including storing cash and livestock. However, these methods come with risks and expenses, particularly in the case of livestock. And deeper into the crucial role of savings for the poor, emphasizing its necessity for covering significant expenses like weddings, funerals, school fees, and investment opportunities. By exploring savings tools that enable them to store money, we aim to address the challenges posed by unpredictable income fluctuations and periods without income. While banks offer a secure and formal means of building funds through savings accounts, accessing the commercial banking sector can be challenging for the poor due to physical and financial constraints. Rural villages often lack convenient bank branches, and minimum deposit requirements pose obstacles.

Market Dynamics

Drivers:

• Growing Importance of digitalization for traditional MFI
• Improves financial inclusion
• Provides emergency funds
• Encourages entrepreneurship

Opportunities:

• Technological advancements
• Focus on social and sustainability impact
• Digitalization raises data security concerns
• Growing significance of block-chain

Artificial Intelligence Poised to Transform the future of Microfinance

AI promises to completely transform everything some things more than others. The BFSI space has already seen the sheer efficiency of AI to process massive data logs and deliver masterful insights through pattern recognition. AI has made a huge difference in the world of payments and financial services which is plagued with incidences of identity fraud and imposter scams. With the need to deliver better experiences and customer conveniences, AI enables better and faster fraud detection in a hyper-digitised world where PII (Personally Identifiable Information) is available for a few hundred dollars on the dark web. Advanced risk monitoring and fraud detection enables prediction and detection in real-time and not post factum.

North America dominates the market for Microfinance.

North America stands out as the dominating region in the global Microfinance Market, with the United States leading in consumption and market share. The region's dominance can be attributed to waste water reclamation system makes it possible for the company to save 40 gallons of water per every case of glove produced, and running the plant with clean burning liquefied natural gas (LNG) reduces the carbon footprint of the manufacturing facility, especially as compared to coal-burning power plants, which are all too often the standard within the greater industry.

Asia-Pacific, and specifically India, is emerging as a key player with substantial growth potential in the Microfinance Market. India has the largest microfinance market globally, followed by Bangladesh. The Government of India (GoI) is continuously striving in the promotion of financial annexation in the banking sector through initiatives that are targeted primarily to bring the India’s underbanked population under the banking array. 

Another noteworthy region is the Middle East and Africa, where the demand for convenient financial solutions is on the rise due to changing lifestyles and an expanding working-class population. South Africa, in particular, showcases promise as a market with high growth potential, driven by urbanization and a growing awareness of convenient options.

Digital microfinance in rural areas is in growing trend

Digital financial services (DFS) lies at the heart of financial inclusion in India. Despite the government’s efforts to create interconnected digital infrastructure, the adoption of DFS in rural areas is marred by digital illiteracy, which has a direct bearing on the acceptance of digital products. E-commerce has gained traction among rural consumers in recent years. Banks and private companies are establishing a network of rural entrepreneurs to create a one-stop-shop for the financial needs of rural customers and help them shop online via digital platforms with built-in digital payment modes.

Major Segmentations Are Distributed as follows:

• By Providers
  • Banks
  • Micro Finance Institute (MFI)
  • NBFC (Non-banking financial institute)
• By End-use
  • Small enterprises
  • Micro enterprises
  • Solo entrepreneurs
• By Purpose
  • Agriculture
  • Manufacturing
  • Trade & services
  • Household
• By Tenure
  • Less than 1 year
  • 1-2 years
  • More than 2 years
• By Region
  • North America
    • US
    • Canada
  • Latin America
    • Brazil
    • Mexico
    • Argentina
    • Colombia
    • Chile
    • Peru
    • Rest of Latin America
  • Europe
    • UK
    • Germany
    • France
    • Italy
    • Spain
    • Russia
    • BENELUX
    • CIS & Russia
    • Nordics
    • Austria
    • Poland
    • Rest of Europe
  • Asia Pacific
    • China
    • Japan
    • India
    • South Korea
    • Thailand
    • Indonesia
    • Malaysia
    • Vietnam
    • Australia & New Zealand
    • Rest of Asia Pacific
  • Middle East & Africa
    • Saudi Arabia
    • UAE
    • South Africa
    • Nigeria
    • Egypt
    • Israel
    • Turkey
    • Rest of Middle East & Africa

Recent Developments

• In January 2024, Muthoot Microfin lowers lending rates by 55bps

Muthoot Microfin has decided to reduce lending rates by up to 55 basis points on fresh loans to existing customers. This move comes after nearly two years of upward movement in loan rates. The reduction in rates will not affect the lender's net interest margin, which rose to 12.6% for the December 2023 quarter.

Microfinance Market Report Gives Answers to Following Key Questions:

• What will be the Microfinance Market ’s Trends & growth rate? What analysis has been done of the prices, sales, and volume of the top producers of Microfinance Market?
• What are the main forces behind the worldwide Microfinance Market? Which companies dominate the Microfinance Market?
• Which companies dominate the Microfinance Market? Which business possibilities, dangers, and tactics did they embrace in the market?
• What are the global Microfinance industry's suppliers' opportunities and dangers in Microfinance Market?
• What is the Microfinance industry's regional sales, income, and pricing analysis? In the Microfinance Market, who are the distributors, traders, and resellers?
• What are the main geographic areas for various trades that are anticipated to have astounding expansion over the Microfinance Market?
• What are the main geographical areas for various industries that are anticipated to observe an astounding expansion in Microfinance Market?
• What are the dominant revenue-generating regions for Microfinance Market, as well as regional growth trends?
• By the end of the forecast period, what will the market size and growth rate be?
• What are the main Microfinance Market trends that are influencing the market's expansion?
• Which key product categories dominate the Microfinance Market? What are the Microfinance Market ’s main applications?
• In the coming years, which Microfinance Market technology will dominate the market?

 Reason to purchase this Microfinance Market Report:

• Determine prospective investment areas based on a detailed trend analysis of the global Microfinance Market over the next years.
• Gain an in-depth understanding of the underlying factors driving demand for different Microfinance Market segments in the top spending countries across the world and identify the opportunities each offers.
• Strengthen your understanding of the market in terms of demand drivers, industry trends, and the latest technological developments, among others.
• Identify the major channels that are driving the global Microfinance Market, providing a clear picture of future opportunities that can be tapped, resulting in revenue expansion.
• Channelize resources by focusing on the ongoing programs that are being undertaken by the different countries within the global Microfinance Market.
• Make correct business decisions based on a thorough analysis of the total competitive landscape of the sector with detailed profiles of the top Microfinance Market providers worldwide, including information about their products, alliances, recent contract wins, and financial analysis wherever available.