The microfinance sector witnessed a 26.5% year-on-year growth in its portfolio outstanding to Rs 2.12 lakh crore in the December quarter, Crif Microlend said in its quarterly report on the sector. Early delinquency, however, saw an increase to 1.9%, compared with 1.3% in the previous quarter.
Following the recent unrest in Assam between lenders and borrowers, the disbursed amount in the North-East saw a decline of 33% over the previous quarter. As a result, the microfinance book in the region shrunk by 3% against the previous quarter, while the national book grew by 8.5%. “The micro finance sector in Assam has faced high repayment stress with PAR 1-30 rising to around 8.5 times and PAR 31-180 rising to 6 times than that of the national average respectively in Q3 FY 2019-20, cautioning the lenders,” the report said.
Delinquencies in the microfinance sector in Q3FY20 were higher than the previous quarter. While early delinquency remained lower than December 2018 at 1.9%, the PAR 31-180 (portfolio at risk) rose by 50 bps y-o-y in December 2019.
Meanwhile, PAR 180+ reduced by 70 bps compared with the year-ago period. “Banks, which had been at the least risk in the previous quarter, have shown deteriorating asset quality with an increase in both 1-30 and 31-180 DPD (days past due) buckets across rural and urban geographies,” the report said. Though banks continue to dominate the market with a portfolio share of 39.6%, NBFCs saw the highest quarter-on-quarter growth to 11.4% against 5.2% q-o-q growth of banks. Small finance banks (SFBs) grew their book by 10.4%.
As of December 2019, there were 6.2 crore live customers, up 3.6% over the September quarter and 21% y-o-y, with 10.6 crore active loans. “With the recent increase in lending limit per borrower and household income limit for borrowers of NBFC MFIs by RBI, the microfinance sector is set to penetrate deeper into untouched geographies and to borrowers in the bottom of the economic pyramid, evident from the consistently growing customer base of the sector,” it said.