Microloans jump 89% in first quarter: report

The microfinance sector has disbursed loans of up to 49,788 crore in the first quarter of the current fiscal year, an 89% jump year-on-year. Thanks to this, the gross loan portfolio (GLP) of the microfinance sector improved by 18% to reach $286 trillion as of June 30.

Bad debts or overdue repayments of more than 90 days affect 2.2% of the total portfolio, which fell 50 basis points (bps) sequentially and 110 bps year-on-year, according to a report from the bureau. CRIF High Mark Credit Information Services . However, write-offs by microfinance lenders increased to 5.7% as of June 30 from 4.8% as of March 31.

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Lenders’ collection efficiency improved with a decrease in monthly forward debits in June for all delinquency bands except 31 to 90 days. This is mainly due to the increase in forward flow rates for banks and NBFC-MFIs. Monthly rollback rates for the default 31-90 day tranche have been declining since March.

In terms of number of loans, lenders issued 125 lakh of loans in Q1FY23, up 67% year-on-year. Tamil Nadu leads in terms of BPL growth among the top 10 states on a sequential basis. The main states contribute 84% of the total portfolio covered by the office.

The volume of requests increased to 19.8% in July 22, requests for new credits representing about 30% of the total.

In terms of lender share, banks continued to dominate the market with a wallet share of 35.6% amounting to a book size of `1.01 trillion, followed by microfinance institutions (MFIs) NBFC with a share of 34.1% and small financial banks with 17.6%. Smaller financial banks, most of which were previously microfinance lenders, are seeking to diversify into other segments to reduce their exposure to unsecured lending.

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Loans between 30,000 and 50,000, which is the largest segment, improved by 16% year-on-year, while a decline was seen in lower-sized loans. Of the total loan portfolio, 45% of the banks’ portfolio consisted of loans of less than Rs 50,000, compared to 27.2% for NBFC MFIs and 31.3% for small financial banks.

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