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Microfinance industry logs 13% growth in last quarter, shows Sa-Dhan data

NBFCs, NBFC-MFIs, and SFBs have witnessed considerable growth in the last one year, but the growth of microloans in banks lagged

May 17, 2022 / 06:29 PM IST
Representative image.

Representative image.

India’s microfinance industry witnessed a growth of over 13 percent in the last quarter of fiscal year 2021-22, while the year-on-year (YoY) growth stood at 5 percent for the industry, shows recent data from Sa-Dhan, an RBI-recognised self-regulatory organisation (SRO) for microfinance institutions (MFIs).

The total portfolio of all lenders rose to Rs 2,62,598 crore in March 2022, compared to Rs 2,32,126 crore in December 2022. While the industry disbursed total loan of Rs 85,667 crore in the final quarter, up from Rs 69,231 crore in the third quarter.

The outbreak of the COVID-19 pandemic badly hurt the microfinance industry. But thanks to the recent changes affected by the Reserve Bank of India (RBI) in the guidelines, the industry is showing signs of recovery, the industry body said.

The RBI, on March 14, rolled out a fresh framework for the microfinance sector to ensure banks and seven MFIs follow an identical set of regulations. The RBI has defined microfinance as a collateral-free loan to a household having an annual income up to Rs 3 lakh per annum.

In terms of the rise in average ticket size (ATS) of loans, the number of loans disbursed and the fall in the number of portfolio at risk, the industry has witnessed an overall growth.

Between December 2021 and March 2022, the ATS grew by more than 2 percent for the industry.

“Though it is a long and arduous journey for the sector to bounce back to its old glory, timely intervention by the government and the RBI in matters pertaining to policy and financial packages have helped the industry to a great extent,” added P Satish, Executive Director, Sa-Dhan.

While growth has been consistent for the non-banking financial companies (NBFCs), small finance banks or NBFC-MFIs for the past one year, banks in the microfinance sector have failed to perform well. The portfolio of banks has decreased by 7 percent, although NBFC-MFIs have shown a significant growth of 19 percent and that of not-for-profit MFIs (NFPs), 30 percent.

The total disbursement of loans by the banks has also gone down by nearly 23 per cent between Q4 FY 2020-21 and Q4 FY 2021-22. While the banks disbursed a total loan amount of Rs 46,911crore in the final quarter of FY 2020-21, the amount fell to Rs 35,775 crore in the last quarter.

Pushpita Dey
Pushpita Dey
first published: May 17, 2022 06:15 pm