Microfinance sector grows at 42.9% in Q1 FY20 as asset quality deteriorates

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Despite slowdown, microfinance industry witnessed a growth of 42.9 per cent in Q1 FY20 over Q1 FY19. However, the asset quality has marginally deteriorated, data released by the Microfinance Institutions Network (MFIN), the representative body of microfinance institutions (MFIs) shows. The total microfinance loan portfolio stood at Rs 1, 90,684 crores as on 30th June 2019.

According to data from MFIN, the PAR>30 days, or the principal value outstanding of loans that have at least one payment more than 30 days overdue, has gone up from 0.67 per cent at the of Q1 of FY19 to 0.93 per cent at the end of Q1 of FY20.  

As on 30 June 2019, 13 banks (after merger of BFIL by IndusInd Bank) hold largest share of portfolio in micro-credit with total loan outstanding of Rs 78,060 crore, which is 40.9 per cent of total micro-credit universe. Non Banking Financial Company (NBFC) MFIs are second largest provider of micro-credit with a loan amount outstanding of Rs 57,601 crore, accounting for 30.2 per cent to total industry portfolio. Small finance banks have a total loan amount outstanding of Rs 32,406 crore with total share of 17 per cent. NBFCs account for another 10.8 per cent and other MFIs account for one per cent of the total portfolio.

Also, the aggregate gross loan portfolio NBFC MFIs stood at Rs 56,827 crore as on 30 June 2019, which is an year-on-year growth of 44 per cent as compared to 30 June 2018 and 4 per cent in comparison to 31 March 2019. The overall health of portfolio has marginally declined over the year as reflected by PAR >30 of 1.12 per cent as on 30 June 2019, in comparison to 0.73 per cent  as on 30 June 2018.

Compared with Q1 FY 18-19, NBFC-MFIs portfolio has grown by 16 per cent, banks by 74 per cent, SFBs by 46 per cent, NBFCs by 35 per cent and other MFIs by 28 per cent. The higher growth of banks’ portfolio and lower growth for NBFC MFIs is mainly due to merger of BFIL with IndusInd Bank during Q1 2019-20.

In terms of regional distribution of portfolio (GLP), East and North East accounts for 34 per cent of the total NBFC-MFI portfolio (MFIN members), South accounts for 27 per cent, North holds 14 per cent, West has a share of 15 per cent and Central contributes 10 per cent. In terms of geographic spread, 74 per cent of the portfolio is rural and 26 per cent is urban. Five top states in terms of loan amount outstanding include Karnataka, Tamil Nadu, Bihar, Odisha and Uttar Pradesh which account for 52 per cent of GLP.

MFI PORTFOLIO BREAK UP




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