Geographic and Institutional Expansion of Microfinance Institutions and their Socio-Economic Impact on Households in India: An Empirical Assessment

Chetna Grewal; Prof. Ashok Kumar

doi:10.36948/ijfmr.2026.v08i05.87465

Geographic and Institutional Expansion of Microfinance Institutions and their Socio-Economic Impact on Households in India: An Empirical Assessment

Author(s)	Ms. Chetna Grewal, Prof. Ashok Kumar
Country	India
Abstract	has emerged as one of the most significant instruments of financial inclusion in India, extending credit and allied financial services to economically vulnerable households that remain outside the ambit of conventional banking. This paper examines the geographic and institutional expansion of Microfinance Lending Institutions (MLIs) in India between 2015 and 2025 and evaluates the socio-economic impact of microfinance on household income and economic stability and on poverty reduction. Secondary data obtained from the Bharat Microfinance Report 2025 (Sa-Dhan, supported by NABARD) reveal that the branch network of MLIs increased nearly three-fold, from 12,221 in 2015 to 37,380 in 2025, while active borrower outreach rose from 371 lakh to 627 lakh over the same period, and the gross loan portfolio expanded from Rs. 48,882 crore to Rs. 238,198 crore. Primary data collected from 380 microfinance beneficiaries/SHG members through a structured questionnaire were analysed using descriptive statistics and one-sample t-tests to examine two hypotheses relating to household income and economic stability and poverty reduction. Both null hypotheses were rejected at the 5 percent level of significance (t = 18.78 and 20.83 respectively, d.f. = 379), confirming that microfinance participation exerts a statistically significant and positive influence on household income and economic stability and on poverty reduction. The study concludes that the sustained geographic and institutional expansion of MLIs, complemented by government-led initiatives such as DAY-NRLM, DAY-NULM and the Lakhpati Didi Scheme, has meaningfully strengthened financial inclusion, household income and poverty reduction in India, while also identifying sectoral and regional gaps that warrant targeted policy attention.
Keywords	Microfinance, Financial Inclusion, MLIs, NBFC-MFI, Self-Help Groups, Household Income, Poverty Reduction, Financial Resilience, India
Published In	Volume 8, Issue 5, September-October 2026
Published On	2026-09-12
DOI	https://doi.org/10.36948/ijfmr.2026.v08i05.87465

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Geographic and Institutional Expansion of Microfinance Institutions and their Socio-Economic Impact on Households in India: An Empirical Assessment

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