Calibrated outreach of microfinance is needed for continued effectiveness: CRIF High Mark – DFID – SIDBI study

CRIF High Mark was the lead presenter in a session titled “Concentrated Outreach of Microfinance: is there a new bubble in the making?” at the Inclusive Finance India Summit in New Delhi in December. Mr Subhrangshu Chattopadhyay (VP – CRIF High Mark) shared the following insights in his presentation***:

Insights on outreach:

•    4.62cr borrowers have accessed microfinance, of whom 2.6cr are actively servicing a microfinance loan (~ 27% households).
•    More than 60% of all borrowers in states such as WB, UP, Bihar are servicing a microfinance loan.
•    1 in every 3 borrowers actively servicing a microfinance loan is a first time borrower i.e. 0.85cr borrowers have availed microfinance for the first time between Jul’14 – Jun’15, with significant additions in MP, Bihar & Gujarat.
•    Average ticket size of a microfinance loan is north of 20K with states such as WB, Assam witnessing increase of 20% YOY.

Insights on risk profile:
•    Portfolio at Risk (31-180 days past due) is 0.19%. However, portfolio quality has worsened in WB, UP, Odisha & Assam between Dec’14 & Jun’15. If the 180+ book is included, 1.6% of GLP is more than 30 days past due.
•    Despite the healthy PAR, number of units that are more than 30 days past due have increased. Between Dec’14 & Jun’15, nearly 3L additional units have crossed the threshold of 30 days past due.

Insights on credit concentration:
•    While 3% of all borrowers are servicing loans from more than 2 lenders, 9% of all borrowers are servicing more than 2 loans. This trend is also now being witnessed in a relatively greenfield state such as MP, where 4% borrowers are servicing more than 2 loans & also servicing loans from more than 2 lenders.
•    Concentration is also being witnessed in states such as WB & Assam where ticket sizes have increased by ~ 20% while growth rate of first time borrowers have been the least.  
•    I in every 5 past due loan is due to a borrower servicing loan from more than 2 lenders.
•    In some state, about 1.7% of all borrowers are getting a second loan within a week of their previous loan being sanctioned.
•    While microfinance hasn’t reached ~ 110 districts, the TOP 15 TALUKS represent 7% of the industry GLP

A)    Study based on data in CRIF High Mark Credit bureau as of June’2015
B)    Study conducted on top 10 states in terms of Gross Loan Portfolio (GLP)