Stress on the microfinance sector has eased during the July-September quarter after a spike in the April-June period because of the second wave of the Covid pandemic.
The 30 days past due portfolio for banks was down from 15.9 per cent to 11.8 per cent while that of non bank microfinance companies was down from 13.7 per cent to 7.1 per cent. Small finance banks saw a sharp improvement in asset quality with dues past 30 days falling to 9.6 per cent during the second quarter from 21 per cent in the first quarter according to data from industry association MFIN.
Micro finance industry officials said with the easing of lockdown, group level attendance have started to increase along with fresh borrower queries which has led to improved disbursal and repayment.
The gross loan portfolio of the industry at Rs 2.43 lakh crore as of September 30, 2021, grew 5.16 per cent year-on-year. Banks hold the largest share of the microfinance portfolio with 41.52 per cent followed by NBFC-MFIs at 33.95 per cent, small finance banks at 16.63 per cent. NBFCs and other micro lenders account for the remaining 7.9 per cent.
Bengal retained the top spot with gross advances of Rs 32,240 crore ahead of Tamil Nadu, Bihar, Karnataka, Uttar Pradesh, Maharashtra, Madhya Pradesh, Odisha, Rajasthan and Assam in the top 10 states during the quarter.
Total loan amount disbursed during the quarter was at Rs 64,899 crore against Rs 25,503 crore during the first quarter and Rs 31,261 crore during the second quarter of the previous year.
“Microfinance operations seem to be returning towards normalcy after a difficult phase of the second wave of the pandemic. The second quarter of FY 2021-22 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 MFIs has also had a positive impact on the liquidity situation, particularly of medium and small MFIs,” said Alok Misra, CEO and director, MFIN.
Misra added that the harmonised microfinance guidelines for all regulated entities are expected soon which will result in a level playing field for NBFC-MFIs.
