Lenders see 4% drop in microfinance loan portfolio in April-June

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August 17, 2021 3:33 AM

The combined GLP of microfinance institutions (NBFC-MFIs), banks, small finance banks (SFBs), not-for-profit (NFP) MFIs and other NBFCs stood at Rs 2.14 lakh crore as on June 30, down from Rs 2.49 lakh crore as on March 31, 2021.

NBFC-MFIs witnessed a decline of around 5%. Banks held a 44% market share in the microfinance segment at the end of June, followed by NBFC-MFIs, which held a 32% share.NBFC-MFIs witnessed a decline of around 5%. Banks held a 44% market share in the microfinance segment at the end of June, followed by NBFC-MFIs, which held a 32% share.

Lenders saw their gross loan portfolio (GLP) in the microfinance segment fall 4% year on year (YoY) during the quarter ended June as the second wave of Covid took a toll on loan growth. Industry association Sa-Dhan said despite the ongoing pandemic, the microfinance sector witnessed a disbursement of Rs 25,820 crore by all lenders, though on a sequential basis, the GLP was down 14%. The combined GLP of microfinance institutions (NBFC-MFIs), banks, small finance banks (SFBs), not-for-profit (NFP) MFIs and other NBFCs stood at Rs 2.14 lakh crore as on June 30, down from Rs 2.49 lakh crore as on March 31, 2021.

P Satish, executive director, Sa-Dhan, said though the disbursements during Q1FY22 were higher compared to the corresponding period of FY21, the business of the sector faced major challenges amid lockdowns. “Small MFIs bore the major brunt as access to funds from banks was restrained. However, I must say that we have seen a recovery in microfinance operations since July,” Satish said.

On a Y-o-Y basis, banks witnessed around 4% growth in GLP, while SFBs saw a decline of around 14% in GLP. The highest growth in terms of GLP was seen in the NFP MFI segment, which clocked 15% growth, while NBFCs recorded a 22% decline in their microfinance GLP. NBFC-MFIs witnessed a decline of around 5%. Banks held a 44% market share in the microfinance segment at the end of June, followed by NBFC-MFIs, which held a 32% share.

Sa-Dhan said the industry average of the portfolio at risk (PAR), where repayments have been overdue for more than 30 days, stood at 17.16%. Fourteen states and Union Territories — Lakshadweep, Kerala, Assam, Andaman & Nicobar Islands, Manipur, Meghalaya, Chhattisgarh, Mizoram, Karnataka, West Bengal, Tamil Nadu, Madhya Pradesh, Pondicherry and Nagaland — have a PAR 30+ value higher than the industry average.

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