Microfinance AUM rises 31%, growth in low-ticket loans declines 15%

Portfolio outstanding of the microfinance sector grew 31 per cent on year and 6 per cent on quarter to ₹4.0-lakh crore as of December 2023. Active loans stood at ₹15.5 crore, higher by 23.2 per cent yoy and 4.1 per cent qoq.

During the quarter, 186.8 lakh microfinance loans were originated worth ₹89,043 crore, according to CRIF Highmark’s ‘MicroLend’ report for Q3 FY24. The volume of loans disbursed was 9.8 per cent higher on year and the value of loans was up 27.1 per cent.

NBFC MFIs continued to lead the market with a portfolio share of 38.3 per cent, followed by banks at 33.4 per cent, small finance banks at 17.4 per cent and NBFCs at 9.4 per cent share.

• Also read: NBFC-MFIs seek revision in annual household income criteria for giving microfinance loans

Average balance

Average balance per loan account stood at ₹25,900 for Q3, up 6.1 per cent on year and 2.0 per cent on quarter. The average balance per borrower was ₹48,900, also higher by 4.3 per cent yoy and 1.6 per cent qoq, with 83.4 per cent borrowers having exposure to two or less lenders, 8.9 per cent to three lenders and 7.7 per cent to four or more lenders.

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Microfinance industry may clock 25% growth in FY24 on positive momentum

The average ticket size for MFI loans during the quarter, rose 15.8 per cent on year and 4.5 per cent on quarter to ₹47,700. Loans with a ticket size of ₹30,000-50,000 held the highest market share of 47.7 per cent, both in terms of value and volumes, growing from 46 per cent a year ago.

Demand for ₹50,000-75,000 loans grew 45 per cent on year and 10.4 per cent on quarter. On the other hand, loans of ₹30,000 or less declined by 15.2 per cent yoy and 6.1 per cent qoq, with their market share falling to 12.2 per cent from 13.8 per cent in the previous year as lenders become cautious in the wake of rising delinquencies in lower ticket segments.

• Also read: Microfinance industry may clock 25% growth in FY24 on positive momentum

Rural markets

Growth was broad-based with rural markets seeing growth of 31 per cent yoy and 6 per cent qoq to ₹2.45-lakh crore whereas urban markets grew 31 per cent yoy and 5 per cent qoq to ₹1.58-lakh crore as of December 2023.

Eastern and southern regions of the country continued to hold the lead with 31 per cent market share each. West Bengal and Uttar Pradesh saw the highest quarterly growth of 10.2 per cent and 9.6 per cent, respectively. Top 10 States by gross loan portfolio accounted for 83 per cent of total MFI loans as of December 2023, with Bihar maintaining its lead.

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