The trend was visible across lenders, with banks witnessing levels as high as 24 per cent in urban areas. Non-banking finance companies, microfinance
institutions and small finance banks have seen slightly higher incidence of early delinquencies in rural areas compared to urban.
The lockdown decision affected the microfinance sector severely, with gross loan portfolio (GLP) shrinking 1.5 per cent sequentially to Rs 22,400 crore in September over Rs 22,660 crore in June. However, compared to the previous year, GLP grew 14 per cent.
With near-nil economic activity in the first quarter of the financial year (Q1FY21), the sector witnessed a huge decline in fresh disbursements, 88 per cent lower compared to same quarter last year. In Q2FY21, as the lockdown was lifted, disbursements went up swiftly, witnessing a 380 per cent spike, in value terms, over Q1.
The microfinance sector is slowly returning to the growth path, with a spike in fresh disbursements. However, since the pandemic is anything but over, repayments and collections remain a concern, more so as the collection mechanism still continues to be physical and reach-based, rather than digital, the bureau said.
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