Banks disburse 40.15% of all Microfinance disbursements in Q4FY20: CRIF

The microfinance sector in the fourth quarter of FY20 disbursed Rs 65610 crore worth of loans, according to data from CRIF. Gross loan portfolio (GLP) of banks and NBFC Microfinance institutions (MFIs) increased by 9.03% to Rs 232.2K crores, whilst the average ticket size of customers also grew from Rs 33200 in the third quarter to Rs 34100 in the fourth quarter of FY20.Disbursements in the last week of March, during which the nationwide lockdown was first imposed, amounted to 1.75% of all disbursements in the month, with an amount lesser than Rs one lakh. Comparatively, in the last week of March 2019, the microfinance ecosystem had collectively disbursed loans worth almost Rs 25 lakh.

Banks continued to dominate the largest space in the microfinance sector, with a 40.15% market share whilst NBFC MFIs recorded a 31.20% market share. Notably, between the fourth quarter of FY19 and FY20, the market share of banks increased from 33.44% whilst the share of NBFC MFIs decreased from 36.28% earlier. Small Finance Banks (SFBs) continued to maintain a share in the range of 18% in the ecosystem over the year. Banks were also noted to have a higher share in eastern geographies, with a market share of 41.1% whilst NBFC MFIs had a 30.2% share in the southern parts.NBFC MFIs disbursed Rs 32334 crore of the Rs 65610 crore disbursed cumulatively by the sector in March, whilst banks disbursed Rs 19336 crore amounting to 29.47% of all disbursements. SFBs in the system disbursed Rs 9532 crore amounting to 14.53% of all disbursements in the quarter. Ticket size of the customer on a yearly basis grew by almost 10% from Rs 31100 to Rs 34100.

Geographically, the eastern region of the country dominated 33.1% of the GLP of Rs 232.2K crore, with demand mainly emerging from West Bengal and Bihar. Southern parts comprised 26.8% of the GLP whilst the Western, Northern and Central areas comprised 14.9%, 11% and 7.8% of GLP, respectively. CRIF also noted that the highest YoY growth in loan book of 13% was observed in the Northern parts of the country, with Himachal Pradesh and Punjab witnessing high Q-o-Q growth of 17% and 14% respectively. Tamil Nadu was ranked as the largest microfinance market in terms of GLP with a 14.2% share in March 2020, whilst also having the largest proportion of borrowers with loans with 4 or more lenders.

Source: Publication: BFSI , 22nd July, 2020