Microfinance institutions (MFIs) are currently facing a critical challenge in rebuilding their credibility and confidence to achieve sustainable growth, according to a joint study by PwC and Sa-Dan. The study indicates that trust among stakeholders, including borrowers and lending institutions, has diminished due to setbacks like demonetisation and the Covid pandemic. These events have disrupted repayment discipline and eroded public confidence. The MFIs are now prioritizing portfolio health over aggressive growth, which has led to a decline in loan disbursements. While this cautious approach aims to restore trust, it may not be sustainable long-term. The study emphasizes the importance of empowering customers with financial literacy and ensuring fair practices to regain their trust. Additionally, the risk of over-indebtedness among borrowers poses a systemic risk to the sector, potentially leading to higher default rates and financial losses for micro-lenders.