Microfinance loans disbursed in Q2 signifies progress towards normal operations

It seems that the operations of microfinance are moving towards normalcy after the difficult phase of the second wave of the pandemic. The gross loan portfolio of the microfinance industry, which serves 5.65 crore unique borrowers through 10.52 crore loan accounts, witnessed an increase of 5.16 per cent year-on-year (YoY) to Rs 2,43,737 crore for the latest quarter ended September 30, 2021.

The figure stood at Rs 2,31,778 crore in the same period a year ago, according to Microfinance Institutions Network (MFIN).

As many as 13 banks hold the largest share of the portfolio in micro-credit with a total loan outstanding of Rs 1,01,209 crore, which is 41.52 per cent of total micro-credit universe. NBFC-MFIs are the second largest provider of micro-credit with a loan amount outstanding of Rs 82,749 Cr, accounting for 33.95 per cent of total industry portfolio.

Small finance banks have a total loan amount outstanding of Rs 40,534 crore with a total share of 16.63 per cent and NBFCs account for another 6.85 per cent and other microfinance institutions account for 1.05 per cent of the universe.

Alok Misra, CEO and Director, MFIN said, “Microfinance operations seem to be returning towards normalcy. The second quarter of FY22 saw growth of portfolio as well as an improvement in portfolio quality. This trend of improvement is expected to continue in the coming quarters. The Credit Guarantee Scheme for microfinance institutions (MFIs) has also had a positive impact on the liquidity situation, particularly of some medium and small MFIs. The harmonised microfinance guidelines for all regulated entities, which are expected anytime soon will further boost the sector by providing a level playing field for NBFC-MFIs to operate.”

In terms of regional distribution of gross loan portfolio, East, Northeast and South account for 65 per cent of the total portfolio.

The gross loan portfolio of MFIN NBFC-MFIs members witnessed an increase of 15.45 per cent YoY to Rs 81,408 crore in Q2FY22. As on September 30, 2021, NBFC-MFIs, on an aggregated basis, have a network of 15,789 branches with 1,31,009 employees.

MFIN is an industry association comprising 58 NBFC-MFIs and 39 associates including banks, small finance banks (SFBs) and NBFCs. It is also the self-regulatory organisation for the regulated NBFC-MFI.