Ever since the AP crisis in 2010 and the creation of a new category of NBFC-MFIs in December 2011, the regulations have carefully nurtured the growth of microfinance in India.
The microfinance sector in India today is growing rapidly, allowing small borrowers access to formal credit. This is fostering greater financial inclusion. The sector witnessed a quarterly growth of 6 per cent in the book in December-ended quarter, which is slightly lower compared to 6.9 per cent in the previous quarter, and yoy growth of 30.9 per cent which is higher than 26.6 per cent of September 2023 quarter, revealed a recent report by CRIF High Mark.
The microfinance sector in the rural markets witnessed growth, soaring by 30.8 per cent yoy, while the urban markets experienced a significant increase of 31.2 per cent. The portfolio outstanding of microfinance sector stands at Rs 402.6K crore as of December 2023 with the top 10 states contributing to 83 per cent. The sector witnessed Rs 89K crore originations (by value) and 186.8 lakh originations (by volume) in Q3 FY24.
Average balance per account witnessed quarterly growth of 1.9 per cent and grew yoy by 6.1 per cent as of December 2023. Average balance per borrower witnessed qoq growth of 1.5 per cent and grew yoy by 4.3 per cent as of December 2023, the report said.
NBFC-MFIs dominate the microfinance market
NBFC-MFIs remain dominant lenders in the market, capturing 38.3 per cent of the portfolio, followed by Banks at 33.4 per cent, SFBs at 17.4 per cent and NBFCs at 9.4 per cent as of Dec’23. About 12.2 per cent qoq growth was witnessed in GLP for banks as against 6.2 per cent for NBFC-MFIs, 3.7 per cent for NBFCs and decline of 4 per cent for SFBs, highlighted the report.
Around 52 per cent of NBFC MFIs’ portfolio comprised of loans of ticket sizes Rs 30K-50K, as against 49.8 per cent for SFBs, 43.7 per cent for NBFCs and 43.7 per cent for Banks, the report further stated.
West Bengal witnessed highest decline
The report highlighted that the top 10 states constitute 83 per cent of the Gross Loan Portfolio (GLP) as of December 2023.
Among top 10 states, West Bengal witnessed highest decline in PAR 90+ DPD from 4.8 per cent in Dec’22 to 0.7 per cent in Dec’23. Among top 10 states, Uttar Pradesh, Madhya Pradesh, Rajasthan, Kerala and Maharashtra have higher PAR 90+ DPD than overall industry (0.9 per cent) as of September 2023.
Regional share in disbursements (value) remained stable from Q2 FY24 to Q3 FY24, share of Northen, Central and Western region declined, the report added.
