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Microlending picked up in December, stress declined, shows MFIN data

There has been a spike in the number of outstanding loans, on the back of a rise in loans disbursed.

March 29, 2022 / 07:59 PM IST

The microfinance sector witnessed a jump in loan disbursals in December as demand returned to the sector, recovering from the Covid impact, showed the latest data released by an industry body.

Microfinance institutions (MFIs) borrow money from banks and lend to low-income borrowers at a margin. These institutions play a significant role in expanding financial inclusion in rural areas.

The amount and number of loans disbursed in December 2021 was three times that in June 2021, according to a recent study by the Microfinance Institutions Network (MFIN).

Even in terms of average loan size, there was a rise of nearly 10 percent between Q3FY21 and Q3FY22, data showed. Along with this, the portfolios at risk witnessed a decreasing trend for all entities, the study showed.