Microfinance: Credit disbursed jumps nearly 90% in June quarter from year ago: Report
Credit and finance for MSMEs: In terms of the number of loans, the quarter ended June 2022 saw 67.9 per cent growth in loans disbursed to 1.24 crore loans from 74.4 lakh loans during the June quarter last FY even as quarterly loans disbursed dropped by 38.6 per cent.
Credit and finance for MSMEs: The microfinance sector has recorded growth of 88.9 per cent in the amount disbursed to Rs 49,788 crore during the first quarter (April-June) of the financial year 2022-23 from Rs 26,357 crore disbursed during Q1 FY22. However, the quarter-on-quarter (QoQ) growth registered a decline of 39.2 per cent from Rs 81,898 crore during Q4 FY22, showed the latest quarterly microfinance report by credit bureau CRIF High Mark on Tuesday. In terms of the number of loans, the quarter ended June 2022 saw 67.9 per cent growth in loans disbursed to 1.24 crore loans from 74.4 lakh loans during the June quarter last FY even as quarterly loans disbursed dropped by 38.6 per cent from 2.03 crore loans during the quarter ended March this year.
Importantly, the portfolio outstanding of the microfinance sector or the gross loan portfolio witnessed 18 per cent year-on-year growth during Q1 to Rs 285.9k crore from Rs 242.3k crore during Q1 last FY. However QoQ growth dipped marginally by 0.2 per cent from Rs 286.5k crore during Q4 FY22, the report CRIF MicroLend – June 2022 noted. With respect to lender share, banks continued to dominate the market with a portfolio share of 35.6 per cent amounting to a book size of Rs 1,01,881 crore followed by NBFC microfinance institutions (MFIs) share of 34.1 per cent with a book size of Rs 97,491 crore, and small finance banks’ 17.6 per cent share having a book size of Rs 50,276 crore.
However, the risk profile showed slight concern with loan amount written off increased to 5.7 per cent during the June quarter from 5 per cent a year ago and 4.8 per cent during the March quarter. Also, loans overdue by more than 180 days (portfolio at risk or PAR 180+ days past due) increased to 9.1 per cent in the microfinance sector from 7 per cent during the June quarter last year and 8.4 per cent during the March quarter this year.
Nonetheless, PAR 30+ DPD and 90+ DPD showed improvement to 5.8 per cent and 2.2 per cent respectively during the June quarter from a high of 14.8 per cent and 3.3 per cent during the year-ago quarter. For the uninitiated, the Reserve Bank of India in March this year had removed the interest margin cap on lending rate under its new regulatory framework for microfinance companies to bring latter at par with other lenders including banks. According to rating agency Crisil, this is one of the factors that will support a revival in the profitability of NBFC-MFIs this fiscal.
Over the past two fiscals, the annual credit cost of NBFC-MFIs had shot up to around 4-5 per cent because of pandemic-related provisioning, versus around 1.5-2.0 per cent prior to that. Crisil had noted in a statement in July this year that with asset-quality pressures gradually easing and sizeable provision buffers created, their credit cost is expected to decline to around 2.5-2.8 per cent this fiscal.
Source: Publication: financialexpress.com ,11th October,2022