The microfinance sector has reported a decline in its gross loan portfolio while the portfolio quality has also deteriorated during the April-June quarter of the current financial year from the January-March quarter of FY24. According to the latest quarterly report on the microfinance sector by credit bureau Crif High Mark, the microfinance portfolio dropped by 2.3 per cent to Rs 4.32 lakh crore during the June quarter from Rs 4.42 lakh crore during the March quarter. Year-on-year, it grew 20.3 per cent from Rs 3.59 lakh crore during the June quarter in the previous fiscal.
The June quarter also recorded a decline in both the number of loans disbursed and the amount. The loan amount disbursed dropped during the June quarter in the current FY to Rs 79,101 crore across 1.62 crore loans from Rs 1.14 lakh crore disbursed across 2.38 lakh crore loans during the March quarter.
At the same time, the industry witnessed increasing stress with rising delinquencies across all DPD (days past due) bands, observed from Mar’24 to Jun’24.
Delinquencies increased across all lender types and ticket sizes during the June quarter from the March quarter, particularly in the top 10 states of Bihar, Tamil Nadu, Uttar Pradesh, Karnataka, West Bengal, Maharashtra, Odisha, Madhya Pradesh, Rajasthan, and Kerala. PAR 1-30 DPD increased to 1.2 per cent from 0.7 per cent while PAR 31-180 DPD grew to 2.7 per cent from 2.1 per cent. Likewise, PAR 180+ DPD increased to 2 per cent from 1.6 per cent.
PAR 31-180 DPD was higher for small finance banks compared to other major lenders. NBFCs had the lowest PAR 31- 180 as of Jun’24.
In terms of collection efficiency, there was an increase in the Net FF% (forward flow) rate from Mar’24 to Apr’24 in all DPD bands. From Apr’24 onwards Net FF% rates declined in 31-60, 61-90 DPD buckets. Lower ticket sizes had higher delinquency (PAR 31-180) as of Jun’24. Among top states, Tamil Nadu and Uttar Pradesh together had an impact of more than 35 per cent towards incremental YoY and QoQ PAR 31-180.
According to Crif High Mark earlier report, write-offs in microfinance sector had jumped to 8.6 per cent (Rs 38,072 crore) of Rs 4.42 lakh crore GLP as of March 2024 from 7.7 per cent (Rs 26,880 crore) of Rs 3.49 lakh crore in GLP as of March 2023. As of March 2022, microfinance loans written off stood at 4.8 per cent or Rs 13,752 crore of Rs 2.86 lakh crore GLP and 3.1 per cent or Rs 8,060 crore of Rs 2.60 lakh crore as of March 2021.