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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 5.2 per in the book in June ended quarter, which is slightly less compared to 6.6 per cent in the previous quarter, and yoy growth of 24.3 per cent which is significantly higher than 17.8 per cent of March 2023 quarter, revealed a recent report by CRIF High Mark.

The microfinance sector in the rural markets witnessed growth, soaring by 27.3 per cent yoy, while the urban markets experienced an increase of 19.9 per cent. The portfolio outstanding stands at Rs 355.3K crore as of June 2023 with the top 10 states contributing to 83.1 per cent. The sector witnessed Rs 67.8K crore originations (by value) and 158 lakh originations (by volume) in Q1 FY24.

Average balance per account witnessed quarterly de-growth of 4.7 per cent and grew yoy by 3.4 per cent as of June 2023. Average balance per borrower witnessed qoq de-growth of 7.3 per cent and grew yoy by 3.8 per cent as of June 2023, the report said.

NBFCs dominate the microfinance market

NBFCs remain dominant lenders in the market, capturing 40.4 per cent of the portfolio, followed by Banks at 32.5 per cent and SFBs at 17.2 per cent. About 18.8 per cent qoq growth was witnessed in GLP for NBFCs, 4.8 per cent for NBFC MFIs as against 2 per cent for Banks and 6.1 per cent for SFBs as of June 2023, highlighted the report.

Around 51.3 per cent of NBFC MFIs’ portfolio comprised of loans of ticket sizes Rs 30K-50K, as against 49.8 per cent for SFBs, 47.5 per cent for NBFCs and 43.9 per cent for banks, the report further stated.

Bihar continues to dominate by GLP

The report highlighted that the top 10 states constitute 83.1 per cent of the Gross Loan Portfolio (GLP) as of June 2023. Bihar which had surpassed Tamil Nadu in March quarter in terms of GLP continues to lead as top state by GLP as of June 2023.

Kerala, Uttar Pradesh and Tamil Nadu recorded highest qoq growth of 6.8 per cent, 5.2 per cent and 4.3 per cent respectively as of June 2023. Average balance per borrower for top states Bihar, Tamil Nadu and Uttar Pradesh stood at Rs 29.3K, Rs 28.7K, Rs 24.8K respectively as of June 2023.

Microfinance sector was dominated by Eastern region (31.8 per cent) followed by Southern (29.5 per cent), as of June 2023. NBFC MFIs have 30.3 per cent share in East while SFBs have concentration of 37.6 per cent in South, the report added.

  • Published On Nov 14, 2023 at 03:41 PM IST

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