Although the microfinance industry’s proportion of portfolio delinquent by 30 days past due (dpd) fell by 524 basis points year-on-year, at 4.94%, in the second quarter this fiscal, overall sectoral non-performing assets (NPAs) continued to be the same as in the corresponding quarter of last fiscal, at around 13%.
Interestingly, the market share of NBFC-MFIs in the country’s microfinance industry in terms of portfolio reached 37.53%, overtaking banks’ market share of 36.18%, at the end of the second quarter of FY23, according to the latest quarterly report compiled by Sa-Dhan.
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The sectoral portfolio at risk (PAR) 30+ dpd significantly improved to 4.94% in the second quarter of FY23, from 10.18% in the same period of FY22, the report said. During Q2FY23, PAR 30+ dpd improved to 4.94% from 5.00% in Q1FY23, while PAR 60+ dpd deteriorated to 3.83% from 3.56% in Q1. As on September 30, 2022, PAR 90+ dpd deteriorated to 2.27% from 1.85% in Q1FY23. PAR 180+ dpd also deteriorated to 11.02% from 10.25% in Q1.
“West Bengal, Madhya Pradesh and Chhattisgarh are among the major states which have PAR 30+ levels higher than the national average of 4.94%. Also, all the eight Northeastern states have PAR 30+ levels higher than the national average of 4.94%,” Sa-Dhan said in the quarterly report.
On collections status, the report said recovery improved in the second quarter in almost all zones compared to the previous quarter, with collections reaching over 96% in states like Uttar Pradesh, Karnataka, Bihar, Tamil Nadu and Gujarat. “Although the overall collection efficiency has improved, the recovery is not uniform across the states/UTs as there are still certain geographies, especially in the Northeastern zone, where the collection is below the normal recovery rate. For example, the collection efficiency in Assam is around 60-70%,” it added.
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For banks, small finance banks (SFBs) and NBFC-MFIs, NPAs were at approximately 17.89%, 12.61% and 10.29%, respectively, while it was the lowest for NBFCs at 3.96% as on September 30, 2022.
Interestingly, on market share of lenders in the sector in terms of portfolio, the report showed that for the first time in years, NBFC-MFIs’ market share is dominating the sector with 37.53%, while banks have slipped to No. 2 position with 36.18% market share, while SFBs, NBFCs and NFPs account for 16.63%, 8.55% and 1.11% of the market share, respectively. At the end of the first quarter this fiscal, the market shares of banks, NBFC-MFIs, SFBs and NBFCs in the microfinance sector were 37%, 35.79%, 16.84% and 9.48%, respectively, while at the end of Q2FY22, their market shares stood at 41.23%, 34.87%, 16.54% and 6.46%, respectively.