Tamil Nadu has displaced West Bengal to emerge as the largest State in terms of the outstanding portfolio of microfinance loans. According to MFIN Micrometer Q4 FY21-22, a quarterly report published by Microfinance Institutions Network (MFIN), the gross loan portfolio (GLP) of Tamil Nadu as of March 31, 2022 stood at ₹36,806 crore. It was followed by Bihar (₹35,941 crore) and West Bengal (₹34,016 crore).

At the end of Q3FY22, West Bengal topped the chart with the highest outstanding portfolio of loans at ₹32,880 crore, followed by Tamil Nadu (₹32,359 crore).

The Top 10 States (based on total microcredit universe) constitute 82.4 per cent of total GLP of the industry. West Bengal was followed by Karnataka, Uttar Pradesh and Maharashtra. According to the report, around 64 per cent of the microfinance portfolio is concentrated in the East, Northeast, and Southern regions.

The 41st issue of the Micrometer report said the microfinance industry served 5.8 crore unique borrowers, through 11.3 crore loan accounts. The overall microfinance industry has a total GLP of ₹2,85,441 crore as of March 31, 2022, an increase of 10 per cent year-on-year (YoY) from ₹2,59,377 crore as of March 31, 2021. 

Lender-wise distribution

Lender-wise distribution of micro-loans shows that 12 banks held the largest share of the portfolio in micro-credit with a total loan outstanding of ₹1,14,051 crore, or 40 per cent of the total microcredit universe. NBFC-MFIs are the second largest providers of micro-credit with a loan amount outstanding of ₹1,00,407 crore, accounting for 35.2 per cent of the total industry portfolio. Small finance banks (SFBs) have a total loan amount outstanding of ₹48,314 crore, accounting for 16.9 per cent, followed by non-banking finance companies (NBFCs) at 6.9 per cent share. Other MFIs account for 1 per cent of the universe. 

The report noted that the proportion of NBFC-MFI portfolios in the universe portfolio increased by 4.1 per cent to 35.2 per cent as of March 31, 2022, though banks continued to be the main contributors. The geographical distribution of the portfolio also witnessed a change with a decrease in the share of the east and northeast by 3.3 per cent, while the share of the south and north regions increased by 1.3 per cent each.

“The microfinance industry has shown good progress during Q4 FY22, building on the momentum created in Q3. The portfolio quality has improved significantly as compared to the end of Q1 FY22, when the second wave of Covid-19 had caused widespread stress across the country,” Alok Misra, CEO & Director, MFIN said, in a statement. 

“The announcement of harmonised regulations for microfinance, near normalisation of collection efficiency and recent verdict of Supreme Court stating that NBFC regulation is the sole purview of the RBI are hugely positive trends, which will see good growth in 22-23,” he added.