Credit and finance for MSMEs: India’s microfinance sector has reported 21 per cent year-on-year (YoY) growth in the financial year 2022-23 with the total portfolio across lenders standing at Rs 3.51 lakh crore vis-a-vis Rs 2.89 lakh crore as of FY22, according to a report by the association for impact finance institutions Sa-Dhan on Monday. Except for the banks (other than small finance banks or SFBs), which recorded paltry growth of 3 per cent, all other lender types recorded double-digit growth with NBFCs leading the tally at 49 per cent growth followed by 37 per cent growth of NBFC-MFIs. Not-for-profits and SFBs also posted significant growth of 25 per cent and 19 per cent respectively.
NBFC-MFIs topped the microfinance portfolio in FY23 with Rs 1.30 lakh crore portfolio size in comparison to banks (Rs 1.20 lakh crore), SFBs (Rs 58,431 crore), NBFCs (Rs 29,664 crore) and not-for-profits (Rs 3,778 crore).
The loan account volume for the microfinance industry increased by 10 per cent to 13.63 crores in FY23 from 12.39 crores in FY22, while lender-wise figures show NBFCs registered the highest growth of 23 per cent followed by NBFC-MFIs (15 per cent), not-for-profits (6 per cent), banks (6 per cent), and SFBs (5 per cent) respectively.
Also read: Microfinance industry to see 25% growth in FY24; GNPAs to improve to 3%: CareEdge
“The microfinance sector has shown significant performance during the last financial year. The overall growth suggests that the industry has come out of the Covid blues completely and is on a growth path. The new regulatory norms have created a level playing field and it is reflected in the growth of portfolio of NBFC and NBFC MFIs,” said Jiji Mammen, ED & CEO Sa-Dhan.
In terms of loans disbursed by value, the amount increased by 26 per cent to Rs 3.19 lakh crore in FY23 from Rs 2.53 lakh crore in FY22. NBFC-MFIs led the disbursement table also with Rs 1.24 lakh crore loans disbursed during FY23 followed by banks (Rs 1.16 lakh crore), SFBs (Rs 48.510 crore), NBFCs (Rs 27,331 crore) and not-for-profits (Rs 3,633 crore), according to the report from Sa-Dhan.
FY23 also recorded an improvement in the asset quality in the microfinance sector. The ratio of loans due across DPD (days past due) buckets dropped as of March 2023 compared to the corresponding quarter of FY22. Portfolio at risk (PAR) by over 30 days or loans due by more than 30 days improved to 2.16 per cent as of March 2023 from 5.27 per cent as on March 2022.
Also read: Microfinance loans unpaid beyond 180 days jump in December quarter: Report
Similarly, loans unpaid by more than 60 days improved to 1.67 per cent from 3.55 per cent and loans due by over 90 days improved to 1.06 per cent from 2.43 per cent during the said period for the microfinance sector.
The report noted that all lenders’ PAR 30+ DPD was lower than the industry average of 2.16 per cent with NBFCs having the lowest ratio of 0.98 per cent followed by not-for-profits at 1.56 per cent and NBFC-MFIs at 1.60 per cent except banks which had a higher PAR 30+ DPD at 3.03 per cent and SFBs at 2.46 per cent.