The loan collections of microfinance companies has improved across most loan buckets in October-December, a recent report by CRIF High Mark showed.
Portfolio at risk for 30 days past due bucket improved to 3.8% as on December 31 from 9.2% a year ago.
Portfolio at risk for 90 days past due improved to 2% as on December 31 from 3.7% a year ago.
However, portfolio at risk in the 180 days past due segment deteriorated to 10% as on December 31 from 9.3% a year ago.
Also read: IT services sector to witness revenue growth decline by 700- 900 bps in fiscal 2024
Specifically, Maharashtra, West Bengal, Madhya Pradesh and Kerala have highest delinquency rate for the portfolio at risk in the 180 days past due segment, the report showed.
“The asset quality in MFI segment is improving rapidly and is likely to improve further.
The collection efficiency for loans disbursed post second wave of covid is 99%+.
Since the tenor of the MFI loans is small, 95% of the AUM of the MFIs represents loans disbursed post 2nd wave, hence large portion of MFI entities books is having a very healthy repayment trend,” said Sadaf Sayeed, chief executive officer, Muthoot Microfin.
“The NPA reported till now represent the pre-Covid or Covid affected portfolio , which are largely provided by the MFI industry . In the last quarter, most of it would be written off, and we may see MFI return to a 99% repayment rate in the next FY for the whole book.”
Loan write-offs increased to 6.6% as on December 31 from 4.4% a year ago.
Gross loan portfolio of microfinancers rose 20% year-on-year to Rs 3.2 trillion as on December 31.
Loans disbursed in the microfinance segment rose 2.5% year-on-year to Rs 70,069 crore in the December quarter.
Amount disbursed fell 3.7% quarter-on-quarter.
Also read: NBFCs likely to rely more on bank borrowing, other funding routes
Microfinance loan providers’ active loans rose 14% year-on-year and 4.6% quarter-on-quarter to Rs 13.1 crore as on December 31.
Non-banking financial companies (NBFC) micro-financiers had a market share of 35.7% as on December 31, banks had 33.5%, and small finance banks had a market share of 16.9% as on December 31.
“We have noticed a substantial improvement in asset quality as a result of the decline in the stressed loans and enhanced collection efficiency, which has been backed by the continued economic revival,” HP Singh, chairman and managing director, Satin Creditcare Network
Further, the elimination of the cap on loan pricing by NBFC-MFIs under the new regulatory framework for microfinance loans beginning in April 2022 has allowed NBFC-MFIs like ours to consider risk-based loan pricing. This will allow us to have a cushion for eventualities, thereby enhancing the quality of our overall assets,” he added.