Growth in the microfinance sector is set to decline for the second consecutive year ending 2011-12.
This is due to the continuing crisis in Andhra Pradesh, where the collection of dues and fresh disbursal of loans have been hit since October 2010.
In view of AP's adverse impact, there is unlikely to be any growth in the industry last financial year, said Mr Alok Prasad, Chief Executive Officer, Microfinance Institutions Network.
However, growth trends are visible in States other than Andhra Pradesh and this should come as a relief to the sector.
According to industry experts, outside AP, the industry is recovering and employment is picking up. The crisis is becoming more a State-specific problem.
“Though we are yet to receive final figures for the year ended March 31, 2012, the growth in non-AP States could be around 10-15 per cent provisionally,” the MFIN functionary said.
Hyderabad-based MFIs are also increasingly focussing on growth outside the State.
“In the fourth quarter of last fiscal, we had more disbursals in non-AP regions compared to the year-ago period,” Mr S. Dilli Raj, Chief Financial Officer, SKS Microfinance, said.
According to Mr Suresh K. Krishna, Managing Director of Bangalore-based Grameen Koota, the company's portfolio had grown to Rs 350 crore last fiscal, an addition of Rs 100 crore.
Encouraged by the trends, MFIs are now focussing on hastening the growth process in the current year.
Mr Samit Ghosh, Managing Director, Ujjivan Financial Services, said that his company is planning to expand its customer base by 20 per cent.
“We plan to grow our business by 10 per cent,” he added.
Before the enactment of AP Microfinance (Regulation of Money Lending) Act 2010, MFIs in the country had a total portfolio of Rs 33,000 crore.
Of this, Andhra Pradesh alone had accounted for about 30 per cent of business.