Microfinance lenders in India are changing how they lend money. A new report by Crif High Mark (a credit information company) shows that loans above Rs 1 lakh grew by a massive 89.8% in the June quarter. At the same time, very small loans are disappearing. Loans under Rs 30,000 fell by 35%, and loans between Rs 30,000 and Rs 50,000 dropped by 20%. This shows that lenders now prefer giving more money to fewer, more reliable people.

In India, any collateral-free loan (a loan where you don't keep gold or house papers as security) up to Rs 3 lakh is called a microfinance loan. For a long time, these were small amounts given to many people. But two years ago, the industry faced trouble because too many lenders gave small loans to the same person. This led to high debt and defaults. Now, lenders are careful and prefer bigger loans for better customers.

Safety is the main reason for this shift. The report says that over 77% of these large loans (above Rs 1 lakh) went to people who were already customers of the same bank or MFI. By giving more money to old, trusted borrowers, banks hope to keep their asset quality (the health of the loan book) strong. It is easier to track one large loan than five tiny ones.

The average amount a person borrows has also gone up. The average exposure (total money owed) per borrower rose by 20% to reach Rs 32,400. Even though small loans are falling, the middle segment is still strong. Loans between Rs 40,000 and Rs 80,000 are the "anchor" for the industry. This segment makes up 40% of new loans in states like Bihar, Uttar Pradesh, Madhya Pradesh, Odisha, and Rajasthan.

Total money given out (disbursements) in the June quarter was Rs 61,100 crore. This is 18.6% higher than last year. However, compared to the March quarter, the numbers are down by 20%. This is normal because of seasonal impacts (cycles in the year where lending slows down). The total money currently owed to the whole MFI industry stands at Rs 3.33 lakh crore.

For bank officers, the best news is about asset quality. The number of loans where payments are late (between 1 to 180 days) has improved. It fell to 2.3% in June, down from 2.6% in March. A year ago, this number was much higher at 7.1%. This means borrowers are paying back their loans much better than before.

What should bankers watch next? The trend shows that the focus is now on "quality over quantity." Instead of chasing new, risky borrowers with tiny loans, the industry is rewarding loyal customers with higher credit limits. This shift helps in risk management (protecting the bank from losses) and ensures the sector stays stable in the long run.