The Covid related economic slowdown and an increased focus on recovery and collections has dragged down disbursements made by NBFC-MFIs in FY-21. The sector witnessed nearly 25 per cent decline in disbursements at ₹57,891 crore in 2020-21, as compared to ₹76,956 crore in 2019-20.

The Gross Loan Portfolio (GLP) of NBFC-MFIs stood at ₹81,475 crore as on March 31, 2021, a growth of around 11 per cent as compared to ₹73,412 crore as on March 31, 2020, as per data available in the 36th issue of Micrometer, a report put out by MFIN (Microfinance Institutions Network).

Also read: Microfinance loan portfolio grows 11.9% to ₹2,59,377 cr as on March-end: MFIN

The number of loan accounts was also down by 39 per cent at 1.70 crore accounts, as against 2.78 crore accounts, however, the average loan amount disbursed per account was higher by around 20 per cent at ₹35,726 during FY-21, compared to the same period last year.

Microfinance loan disbursals during the fourth quarter of FY-21 was up by 29 per cent at ₹91,516 crore as against ₹71,090 crore during the same period last year. Sequentially, disbursements grew by 54 per cent from ₹59,508 crore during the third quarter of FY-21.

Loan disbursal up

The number of loans disbursed during Q4 2020-21 increased to 2.30 crore from 1.79 crore in Q3, signifying steady progress towards normalcy, the report said.

The overall microfinance industry currently has a total GLP of ₹2,59,377 crore as on March 31, 2021, an increase of around 12 per cent on a year-on-year basis as compared to ₹2,31,787 crores as on March 2020. This is on the back of healthy addition of four lakh unique borrowers during the pandemic-struck 12 months for the period ending March 2021, the report said.

While NBFC-MFIs portfolio increased by nine per cent, banks’ share increased by nearly 23 per cent, SFBs saw a marginal rise of around two per cent while NBFCs witnessed a decline of around five per cent.

In terms of regional distribution of GLP, East, North East and South together account for 66 per cent of the total portfolio.

PAR improves

On the asset quality front, the portfolio at risk (PAR), which had been on an upward trend since March 2020, has witnessed an improvement post December 2020. However, the improvement in 30-day PAR as of December 2020 is mainly due to write-offs and restructuring of loans under RBI resolution framework, the report said.

According to Alok Misra, CEO and Director, MFIN, the industry has been able to cover up well for the standstill in operations in the first two quarters of FY-21, thereby showing an overall growth in portfolio and first time borrowers during the year.

“Going forward, RBI’s consultative document on regulation of microfinance would bring a paradigm shift in how microfinance is implemented by restoring parity among various types of lenders. Further, proactive measures by RBI through its resolution framework and pushing liquidity through targeted schemes along with the Finance Minster’s latest announcement on credit guarantee scheme on term loans to MFIs, provides renewed impetus to the sector’s recovery and its contribution towards financial inclusion,” he said.