The microfinance industry is expecting growth to further consolidate in Q4 of this fiscal backed by a steady demand and improving portfolio quality.

Loan disbursements in Q3 grew at ₹65,392 crore, as compared with ₹59,508 crore in the same period last year. Disbursements grew by nearly 6 per cent as compared with ₹61,894 crore recorded during the same quarter of FY20 (non-Covid period). The gross loan portfolio (GLP) as on December 31, 2021, increased by over 10 per cent at ₹2,56,058 crore, as against the year-ago levels, said the MFIN Micrometer for Q3FY22.

The microfinance industry served 5.57 crore unique borrowers, through 10.58 crore loan accounts, as on December 31, 2021. As many as 13 banks hold the largest share in micro-credit loans with a total outstanding of ₹1,03,569 crore, accounting for nearly 40 per cent of the total micro-credit portfolio.

Second-largest providers

NBFC-MFIs are the second largest providers of micro-credit with a loan amount outstanding of ₹87,444 crore, accounting for 34 per cent of the total portfolio. NBFC-MFIs disbursed a loan amount of ₹22,120 crore in Q3 through 59.4 lakh accounts, as compared to ₹19,518 crore disbursed in the year-ago period. Average loan amount disbursed per account during the quarter increased by nearly 9 per cent y-o-y at ₹37,228.

Small finance banks have a total loan amount outstanding of ₹42,847 crore with a total share of around 17 per cent while NBFCs account for another 8 per cent and other MFIs account for around 1 per cent.

Continued momentum

Alok Misra, CEO & Director, MFIN, said Q3 saw a continuation of growth momentum of microfinance operations which were impacted due to the second wave. Portfolio quality continued to improve, and the portfolio growth showed promising signs as well. Historically, Q4 brings highest growth in the sector and therefore the quarter should show further consolidation.

“The announcement of the ‘Regulatory Framework for Microfinance Loans, 2022’ has come at a very opportune time when the industry has seemingly navigated the stressful Covid period well and has started showing signs of normalcy. The new regulation is expected to usher in a new phase of growth in the microfinance sector which is more client-centric and responsible and will enable regulated entities to reach out to new unreached areas and excluded households. At the same time, the regulation is applicable to all regulated entities and has created a level playing field, which will encourage healthy competition and challenge regulated entities to innovate and become more efficient, and in the process benefit the clients and contribute further towards achievement of financial inclusion,” he said.

NBFC-MFIs received a total of ₹12,786 crore in debt funding during Q3, an increase of nearly 20 per cent over the same period last year. Total equity grew by nearly 9 per cent y-o-y to ₹19,402 crore.

Related Topics