Stress in MFI sector largely due to customer overleveraging: Motilal Oswal – Business Standard

The Microfinance Institutions (MFI) sector is facing significant stress, primarily because customers are overleveraging themselves, according to a report by Motilal Oswal. This has become a major concern for the industry as it can lead to financial instability for both the customers and the institutions. Overleveraging occurs when customers borrow more money than they can realistically afford to repay, putting them at risk of defaulting on their loans. This not only affects the customers’ financial well-being but also puts pressure on the MFIs to recover the borrowed funds. As a result, the sector is experiencing heightened levels of stress, which could have long-term repercussions if not addressed promptly. It is crucial for both customers and MFIs to practice responsible borrowing and lending to ensure the sustainability of the sector in the future.