Global Microfinance Market Analysis and Forecast 2019-2028

The global Microfinance market is expected to witness a robust growth rate of more than 11% during the projected period. This is due to the increasing number of microenterprises, government efforts to promote microfinance and lower interest rates. As per the World Bank, over 7,000 microfinance institutions are operating across the globe, serving nearly 16 million low-income people in emerging economies, such as India and Bangladesh.

Along with the growth of microfinance institutions, the government support for women’s empowerment in rural areas is further offering growth to the microfinance industry. Market growth is being positively influenced by the pivotal role played by microenterprises in driving economic development.

The global microfinance industry plays a key role in the global financial sector, having come into existence to especially serve the low-income and more overlooked sections of society. Low-income individuals, the unemployed, and people without access to any financial services can all benefit from microfinance.

Loan simplifications and an increased target population is anticipated to drive the growth of the market

Online finance has seen substantial growth in recent years due to the increase in smartphone and internet user penetration around the world. As it offers immediate affordability for applications, microfinance is regarded as one of the practical and often-used options for lenders. Multiple businesses and individuals have started filling out applications online for taking loans in recent years rather than getting into the time-consuming lending process.

In order to serve a greater population at a cheaper cost, the microfinance sector has been able to quickly convert to a more efficient digital model due to the advent of new-age Fintech. Additionally, the simplicity of loan applications for consumers and a variety of additional advantages for lenders, such as automated loan management, and rapid approval are shifting their attention toward digital microfinance, therefore driving the market growth.

Microcredit segment to hold a prominent share in the market

The micro-credit segment is estimated to contribute a significant share of the global microfinance industry and is expected to retain its position during the forecast period. Microcredits significantly support low-income households with several financial needs, which include credit, emergency funds, liquidity, investment, and others.

The segmental growth of the market is primarily attributed to the group loan model and is widely adopted by microfinance institutions as it reduces the risk of repayment. Group borrowers are linked by joint legal responsibility; therefore, if one of the borrowers’ switches from a safe to a risky project (moral hazard), the probability is that the borrower’s partner will pay the liabilities. Therefore, microfinance institutions take an active part in offering group and individual micro-credits.

Asia Pacific constitutes a huge market share in the global microfinance market

Geographically, Asia Pacific represents one of the largest regional markets for microfinance market. The major countries that are involved in the regional growth of the market include India, Bangladesh, Indonesia, and Vietnam. Among these countries, India has the largest microfinance industry across the globe. The major factors driving the market growth in India include government initiatives to drive MSMEs (micro-small-medium enterprises) and the presence of a large number of microfinance institutions. For instance, the Government of India announced a collateral-free loan for the MSMEs worth around US$ 30 billion, in support of the loss incurred due to the outbreak of the COVID-19 pandemic.

Market Structure and Competitive Landscape

The global microfinance market is fragmented in nature with various players operating in the market. Some of the prominent players that contribute significantly to the market include Muthoot Finance, Annapurna Finance Ltd, IndusInd Bank Ltd, Kotak Mahindra Bank Ltd, Bandhan Bank Ltd, CDC Group Plc, BRAC International Holdings B.V, Asirvad Microfinance Ltd, Bank Rakyat Indonesia Tbk, Grameen Foundation USA, Kiva Microfunds, and others.

These players adopt various strategies in order to reinforce their market share and gain a competitive edge over other competitors in the market. Mergers and acquisitions, Partnerships, and collaborations are some of the strategies followed by industry players. Some of the key developments in the Global Microfinance Market include, 

• In July 2019, IndusInd Bank Ltd (IBL) took over a stake in Bharat Financial Inclusion Ltd (BFIL) which is indicative of the potential in rural banking and microfinance. IBL is now likely to focus on rural banking as it transfers BFIL’s employees and operations into a wholly-owned captive Business Correspondent subsidiary.
• In September 2018, IDFC Bank acquired Grama Vidiyal Micro Finance, one of the largest microfinance institutions in the country. This significantly enhances the reach of IDFC Bank, giving it access to 1.2 million rural and semi-urban households through Grama Vidiyal’s network of 319 locations across 65 districts of Tamil Nadu, Kerala, Karnataka, Pondicherry, Maharashtra, Gujarat, and Madhya Pradesh.

Key Market Segmentation

RationalStat has segmented the global Microfinance market on the basis of provider, types of funding, end user, and region.

• By Provider
  • Banks
  • Micro Finance Institute (MFI)
  • Non-Banking Financial Corporations (NBFC)
• By Types of Funding
  • Local Financing sources
  • International Financing Sources
• By Service Type
  • Micro Credit
  • Leasing
  • Micro Investment Funds
  • Insurance
  • Saving Account
  • Checking Account
• By Region
  • North America
    • US
    • Canada
  • Latin America
    • Brazil
    • Mexico
    • Rest of Latin America
  • Western Europe
    • Germany
    • UK
    • France
    • Spain
    • Italy
    • Benelux
    • Nordic
    • Rest of Western Europe
  • Eastern Europe
    • Russia
    • Poland
    • Rest of Eastern Europe
  • Asia Pacific
    • China
    • Japan
    • India
    • South Korea
    • Australia
    • ASEAN (Indonesia, Vietnam, Malaysia, etc.)
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC
    • South Africa
    • Turkey
    • Rest of the Middle East & Africa

Research Methodology

RationalStat has developed a state-of-the-art research methodology to crunch numbers and provide the best possible real-time insights to clients. We combine a varied range of industry experience, data analytics, and experts’ viewpoint to create a research methodology for market sizing and forecasting.

RationalStat combines a mix of secondary sources as well as primary research to assess the market size and develop a forecast. Key steps involved in accurately deriving the market numbers are:

• Defining the problem by understanding the type of market and data required by the client.
• Data gathering and collection through relevant paid databases, publicly available sources, company reports, annual reports, surveys, and interviews.
• Formulating a hypothesis to create market numbers, forecast, influencing factors, and their relevance.
• Evaluating and analyzing the data by referring to data sources utilized and leveraged.
• Validating, interpreting, and finalizing the data by combining the details gathered from primary and secondary sources with the help of experienced analysts.

Secondary Sources

• Annual reports, company filings, investor presentations, product catalogs, and company documents
• Industry and market-related documents available in the public domain
• Paid database including Bloomberg, Factiva, S&P Capital IQ, FactSet, Refinitiv Eikon, ICIS, EUWID, and Thomson Reuters, among others
• Whitepapers, research papers, and industry blogs.

Why Buy this Report?

The report is intended for the overall microfinance industry, government organizations, regulatory bodies, operating players, regulatory agencies, and market research firms, among others. The report provides an in-depth analysis of market size, consumption pattern, ongoing market trends and challenges, and future market opportunities. The report will serve as a source for a 360-degree analysis of the market thoroughly delivering insights to clients to find the right answers to their business questions.

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