Loan disbursements by microfinance institutions shrank to a over two-year low in the December quarter to Rs 220.9 crore, down 36% compared with the year-ago period.
The number of new loans disbursed registered a de-growth of 29%, according to the 52nd edition of Micrometer, a publication of the Microfinance Industry Network (MFIN), released on Tuesday.
The report comes at a time when microfinance institutions are facing challenges as they have to contain loan growth due to overleveraging of borrowers. The average loan amount disbursed per account during the December quarter was Rs 51,691, higher by over 15% year-on-year.
MFIN, an RBI-recognised self-regulatory organisation, is an industry body of banks, NBFCs, MFIs and small finance banks providing microfinance.
The portfolio at risk (PAR) deteriorated to 8.8% as of December 31, against 3.5% a year ago. The PAR means days past due that shows the proportion of outstanding loans that are considered significantly delinquent and potentially at risk of defaulting.
Assets under management of MFIs stood at Rs 1.42 lakh crore, lower by 0.1% year-on-year and 6.5% on a sequential basis. Due to the prevailing stress in the sector, NBFC-MFIs received Rs 12,921 crore in debt funding in quarter under review, down 40% year on year.
While banks contributed 79% of the total borrowing, NBFCs accounted for nearly 9%, followed by external commercial borrowing at 8% and all India financial institutions at 4.3%.
In terms of geographical coverage, east, northeast and south comprise 63% of the total microfinance portfolio. The portfolio quality as measured by PAR 31–180 days jumped to 6%, compared with 2% a year ago, the report said.