The gross disbursements of microfinance institutions declined 38 per cent to Rs 20,000 crore in 2011-12 compared with the previous financial year.

According to a report brought out by the Microfinance Institutions Network, a registered body of 45 MFIs accounting for 90 per cent of the sector, the drop in disbursals in Andhra Pradesh was 67 per cent apparently due to the crisis since October 2010.

The non-Andhra Pradesh MFI disbursals, if seen in isolation, had increased by 5 per cent. As on March 31, 2012, there were 25.45 million loans which showed a 22 per cent decline over previous year.

The borrower-base stood almost static at 2010-11 levels for non-AP MFIs, while it declined 17 per cent at the all-India level.

WRITE-OFFS

The sector, which was badly hit by the AP Microfinance (Regulation of Moneylending) Act 2010, had witnessed significant write-offs as there was almost a complete halt in repayment and disbursals in AP during the period under review.

The total write-offs stood at Rs 1,779 crore in the last financial year. “Five MFIs, including two large AP-based MFIs, are yet to finalise the write-off amounts. Hence, the final write-offs may be even higher,” the report said.

OUTLOOK

When contacted, Mr Alok Prasad, Chief Executive Officer, MFIN, told Business Line on Friday that the future of MFIs outside Andhra Pradesh looked ‘quite promising' with disciplined client behaviour resulting in over 99 per cent repayments.

There was a clear divide between Andhra Pradesh and non-AP regions. “In Andhra Pradesh, the industry is at a dead-end. This will not improve unless the State Government works on normalising the situation,” he said.

nagsridhu@thehindu.co.in

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