Microfinance loans increases by 11% in Q2 FY23

21 Dec 2022 CW Team

Microfinance loans in the country increased by nearly 11% to Rs 71,916 crore in the second quarter of the current fiscal year, according to industry data.

During the same period last year, microfinance loans worth Rs 64,899 crore were disbursed.

According to the latest Microfinance Institutions Network report, a total of 1.81 crore loans were disbursed during Q2 FY 2022-23, compared to 1.85 crore loans during Q2 FY 2021-22. (MFIN).

The country's microfinance loan portfolio stood at over Rs 3 lakh crore at the end of September 2022, according to the MFIN Micrometer Q2 FY 2022-23 report, serving 6.2 crore unique borrowers with 12 crore loan accounts.

"The overall microfinance industry currently has a total gross loan portfolio (GLP) of Rs 3,00,974 crore as on September 30, 2022 an increase of 23.5 per cent year-on-year over Rs 2,43,737 crore as on September 30, 2021," the report stated.

Thirteen banks hold the largest portion, or Rs 1,13,565 crore, or 37.7% of the total amount of outstanding microloans.

The second-largest provider of microcredit is an NBFC-MFI, with loans outstanding totaling Rs 1,10,418 crore, or 36.7% of the industry's overall portfolio.

In comparison to the same quarter in FY21, the average loan disbursed per account during the quarter was Rs 40,571, an increase of around 12%.

Small financing banks (SFBs), among others, hold a share of 16.6% of the total loan amount outstanding of Rs 50,029 crore. Other microfinance institutions (MFIs), which make up 1.1% of the microfinance sector, make up the remaining 7.9% of non-banking financing firms (NBFCs).

According to the report, there were 12 crore active loan accounts for microfinance as of September 30, 2022, up 14.2% over the previous year.

The east, northeast, and south together contributed for 63.9% of the portfolio's geographic distribution of GLP.

The largest state in terms of outstanding portfolios is Tamil Nadu, followed by Bihar and West Bengal.

"In Q2FY23, microfinance industry touched Rs 3,00,974 crore mark of portfolio outstanding. NBFC-MFIs have also collectively crossed the Rs 1 lakh crore mark, though banks still have the majority share in microfinance market.

"The CAGR of the industry in the last five years has been a healthy 22.2 per cent despite two years of disruption due to the pandemic," said Alok Misra, CEO and Director, MFIN.

As the forecasted loan demand is anticipated to be between Rs 17 and Rs 20 lakh crore by 2025, the growth pace is likely to build up much further, he noted.

MFIN is a self-regulatory organisation recognised by the RBI for the microfinance industry.