Kolkata, Sept 22

The microfinance industry, which has witnessed close to 80 per cent growth in loan disbursals during the first quarter of FY-23 on a year-on-year basis, is likely to register a further pick up in disbursements during the remaining part of this fiscal backed by pent-up demand, expansion of branch network and conducive policy.

Loan disbursals by microfinance industry registered 80 per cent growth during Q1 FY-23 to ₹45,830 crore as compared to ₹25,503 crore same period last year. The number of loans disbursed also increased to 116 lakh during the quarter as against 71 lakh in the same period last year, indicating continued growth of microfinance portfolio, Microfinance Institutions Network (MFIN) said in the 42nd issue of Micrometer report for quarter ending June 30, 2022.

According to Devesh Sachdev, MFIN Chairperson, during the first quarter, the sector was occupied with the implementation of new harmonized regulations of the RBI. Despite that the growth has been good and credit quality of post-Covid disbursements are at over 95 per cent.

“During the remaining period of FY-23, riding on robust branch expansion, pent up demand and conducive policy, the sector is poised for sustainable growth,” Sachdev said in the report.

Gross loan portfolio

The overall microfinance industry currently has a total Gross Loan Portfolio (GLP) of ₹2,93,154 crore as on June 30, 2022, which is almost 24 per cent higher as compared to ₹2,37,369 crore in the same period last year.

As on June 30, 2022, the microfinance industry served six crore unique borrowers, through 11.8 crore loan accounts. As many as 12 banks hold the largest share of portfolio in micro-credit with total loan outstanding of ₹1,12,547 crores, which is 38 per cent of the total micro-credit universe. NBFC-MFIs are second largest provider of micro-credit with a loan amount outstanding of ₹1,02,465 crores, accounting for 35 per cent of the total industry portfolio. Small Finance Banks have a total loan amount outstanding of ₹49,646 crores with total share of 17 per cent and NBFCs account for another nine per cent.

In terms of regional distribution of GLP, east, northeast and south account for around 64 per cent of the total portfolio. Tamil Nadu remains the largest state in terms of portfolio outstanding followed by Bihar and West Bengal, the report said.

GLP of NBFC-MFIs stood at ₹98,508 crore as on June 30, 2022, a 30 per cent YoY rise as compared to ₹75,677 crore in the same period last year. The GLP includes owned portfolio of ₹84,044 crore and managed portfolio of ₹14,464 crore.

Loan amount of ₹22,745 crore was disbursed in Q1 FY-23 through 57.7 lakh accounts, as compared to ₹6,279 crore disbursed last year through 17.4 lakh accounts.

NBFC-MFIs received a total of ₹8,819 crore in debt funding during Q1 FY-23, which is 1.5 times of the debt received during Q1 FY-22. Total equity of the NBFC-MFIs grew by around 20 per cent YoY to ₹22,178 crores as on June 30, 2022.

“After the announcement of harmonized regulations for microfinance in March 2022, most institutions took some time in making policy changes and adapting to the new guidelines, but the industry was still able to record a growth of 23.5 per cent in portfolio on a YoY basis and 2.7 per cent over the previous quarter, which should see further strengthening in the coming quarters with supportive operating and regulatory environment. Improvement in microfinance portfolio quality over the last one year has been good, with delinquency as measured by PAR>30 ratio, reducing to 13.8 per cent as on June 30, 2022 from 22.4 per cent as on June 30, 2021,” Alok Misra - CEO & Director, MFIN said in the report.