Portfolio at risk of MFIs rises to 2.42%; 2.11 crore borrowers added to industry since March 2018

The ‘portfolio at risk (PAR) for 30 days’ for microfinance institutions (MFIs) has risen to 2.42 per cent as of December 2019, as against 2.15 per cent in the corresponding quarter of last financial year, according to Microfinance Institutions Network (MFIN).

According to MFIN, an RBI-recognised self-regulatory organisation and industry association, since March 2018, an estimated 2.11 crore borrowers have been added as customers. “As on December 31, 2019, the microfinance industry serves 5.64 crore unique borrowers through 10.11 crore loan accounts with operations in 619 districts in 36 states and Union Territories,” it said.

The entire microfinance industry posted a growth of 24.22 per cent in Q3 of FY 2019-20 over Q3 FY 2018-19, with the gross loan portfolio (GLP) at Rs 2,11,302 crore as of December 2019.

Harsh Shrivastava, CEO, MFIN, said, “The industry has reached 30 per cent of the potential households in the country that need microfinance. There is, hence, immense scope for growth and expansion. With credit now reaching almost every part of the country, microfinance is well positioned to make a long lasting impact in the quality of lives of low-income households by supporting their livelihoods, promoting entrepreneurship among women and thereby contributing to the overall economy of the country.”

MFIN said banks hold the largest share of portfolio in micro-credit, with total loan outstanding of Rs 83,876 crore of the total micro-credit universe, mainly due to merger of BFIL with Induslnd Bank during Q1 of 2019-20. NBFC-MFIs are the second largest provider of micro-credit with a loan amount outstanding of Rs 66,159 crore. Small finance banks (SFBs) have a total loan amount outstanding of Rs 37,282 crore, NBFCs have total loan outstanding of Rs 21,591 crore and other MFIs account for Rs 2,395 crore in the microfinance universe.

In terms of regional distribution of portfolio (GLP), East and North East accounts for 40 per cent, South accounts for 28 per cent, North holds 10 per cent, West has a share of 14 per cent and Central contributes 8 per cent. The top 10 states (based on universe data) constitute 82.5 per cent in terms of GLP.

Tamil Nadu continues to hold the largest share followed by West Bengal and Bihar.

In the case of NBFC-MFIs members of MFIN, 3.1 crore clients have loan outstanding from NBFC-MFIs — an increase of 31 per cent over Q3 of FY 2018-19. The aggregate loan portfolio of these members stands at Rs 67,320 crore as of December 2019.