The Reserve Bank of India (RBI) has cautioned Non-Banking Financial Companies (NBFCs) regarding the performance of microfinance loans, noting a deterioration in asset quality for NBFC-microfinance institutions (MFIs). While the overall NBFC sector's asset quality improved, MFIs saw their gross non-performing assets (GNPA) ratio rise to 4.1% and net non-performing assets (NNPA) to 1.2% by March 2025. The RBI stressed the need for close monitoring, diversified funding, and sound practices to ensure financial stability and inclusive growth.