Weathering challenges of 2nd Covid wave, microfinance industry grows in Q1FY22

Shobha Roy Kolkata | Updated on September 14, 2021

microfinance person work in his table on some paper document with graph and chart vector graphic illustration   -  Getty Images/iStockphoto

Loan disbursements rose to ₹25,503 crore against ₹6,186 crore in the same period last year, loan portfolio up 4 per cent

The regional lockdowns across various parts of the country induced by the second wave of Covid notwithstanding, the microfinance industry witnessed a surge in disbursements in the April-June 2021 quarter.

Loan disbursals

Loan disbursals jumped to ₹25,503 crore during Q1FY-22 compared to ₹6,186 crore in the same period last year. The number of loans disbursed also increased to 71 lakh as against just around 21 lakh last year, MFIN (Microfinance Institutions Network) said in its latest issue of Micrometer report for April-June 2021.

As on June 30, 2021, the microfinance industry served 5.68 crore unique borrowers, through 10.30 crore loan accounts. The overall industry currently has a total gross loan portfolio (GLP) of ₹2,37,369 crore, an increase of over 4 per cent compared to ₹2,27,727 crores as on June 30, 2020.

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According to Alok Misra, CEO and Director of MFIN, both loan portfolio and disbursements rose in Q1FY-22 on a Y-o-Y basis. The growth was however muted sequentially in comparison to Q4FY-21.

“This growth, despite difficult operating environment due to second wave of Covid-19, shows the ability of the industry to learn quickly and adapt to challenges. The Credit Guarantee Scheme for microfinance institutions with focus on small and medium-sized MFIs would ensure growth of MFIs in the short term as fresh loans need to be disbursed using the funds received under this scheme. In the medium to long-term, the asset-class based regulations proposed in the RBI’s consultative document, expected soon, would provide the much-needed impetus to industry to transform for a better future, leveraging on the past experience,” Misra said.

Share of loan portfolio

Banks (numbering around 13) hold the largest share of the portfolio in micro-credit with a total loan outstanding of ₹1,02,405 crore, accounting for a little over 43 per cent of the total micro-credit universe.

NBFC-MFIs are the second largest provider of micro-credit with a loan amount outstanding of ₹75,021 crore, accounting for 32 per cent. NBFC-MFIs witnessed close to 7 per cent increase in loan outstanding on a year-on-year basis against ₹71,301 crore as on June 30, 2020. The GLP includes owned portfolio of ₹65,206 crore and managed portfolio of ₹11,031 crore. Loan amount of ₹6,511 crore was disbursed by NBFC-MFIs in Q1FY-22 through 17.97-lakh accounts compared to ₹561 crore disbursed during the same period last year through 1.99-lakh accounts.

Average loan amount disbursed per account during the quarter under review was ₹36,243, which is an increase of around 29 per cent compared to the same quarter last financial year.

Small finance banks have a total loan amount outstanding of ₹38,624 crore with a total share of around 16 per cent. NBFCs account for another 8 per cent, and other MFIs for around one per cent of the total microcredit portfolio.

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

Published on September 14, 2021

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