Microlending in Assam is likely to be muted amid rising delinquencies, according to rating agency ICRA.
Microfinance institutions have seen a surge in lending in the past couple of years in the northeastern state aided by a mix of factors such as high credit demand, entry of new players, stress among public sector banks and overall growth in loan ticket sizes.
The exposure of non-bank microfinance entities in Assam at the end of the September quarter was Rs 2,627 crore, recording a growth of 64 per cent over the corresponding previous quarter.
The growth rate of gross loan portfolio in Assam was the second best among the top 10 states after Bihar. Including the banks, small finance banks and other financial institutions, the overall portfolio was Rs 12,600 crore.
But natural calamities and over leveraging have led to concerns over the regulatory nature and growth of the sector amid ongoing protests and political tensions. The short-term overdue portfolio has increased sharply from 1.5 per cent in September 2019 to around 10 per cent in December 2019.
“The recent protests in Assam have negatively impacted MFI operations and the softer bucket delinquencies have shot up in December 2019,” said Abhishek Dafria, vice-president – structured finance ratings at ICRA.
