India's microfinance sector has shown signs of recovery, with the gross loan portfolio increasing to ₹3.39 lakh crore at the end of March 2023, up from ₹3.22 lakh crore in December 2022. This 5.3% growth comes after a challenging period of 11 consecutive quarters of contraction, which saw the portfolio shrink from a peak of ₹4.43 lakh crore in March 2024. The decline in delinquency rates to 2.3% indicates improved repayment behavior among borrowers, marking the lowest delinquency level recorded in the past five quarters. RBL Bank managing director R. Subramaniakumar noted that the recovery trend is likely to continue unless there are adverse developments on the ground. However, experts like Jiji Mammen, executive director at Sa-Dhan, caution against potential over-lending, emphasizing the importance of adhering to industry guardrails to sustain growth. The recovery has been primarily driven by non-banking finance companies-microfinance institutions (NBFC-MFIs) and private banks, while small finance banks continue to face challenges in their microfinance operations.