Microfinance disbursements almost at pre-Covid levels: MFIN

Microfinance loan disbursements are reaching almost at pre-Covid levels backed by increased demand, with the gross loan portfolio (GLP) of NBFC-MFIs growing around 11% year-on-year in the third quarter this fiscal, microfinance industry association MFIN said on Monday.

MFIN said gross loan portfolio of non-banking financial companies-microfinance institutions (NBFC-MFIs) stood at Rs 74,712 crore as on December 31, 2020, compared with Rs 67,255 crore in the year-ago period. Microfinance industry’s gross loan portfolio in the third quarter of FY21 witnessed an increase of 10.1% y-o-y at Rs 2,32,648 crore.

“Fourteen banks hold the largest share of the portfolio in micro-credit with a total loan outstanding of Rs 97,956 crore, which is 42.10% of total microcredit universe. NBFC-MFIs are the second-largest provider of microcredit with a loan amount outstanding of Rs 72,128 crore, accounting for 31% of the total industry portfolio. SFBs (small finance banks) have a total loan amount outstanding of Rs 39,062 crore with a total share of 16.79%. NBFCs account for another 9.06% and other MFIs account for 1.04% of the universe,” the industry association said.

The top 10 states (based on universe data) constitute 82.16% in terms of GLP. West Bengal has regained its spot as the largest state in terms of portfolio outstanding, followed by Tamil Nadu and Bihar. Among the top 10 states, West Bengal has the highest average loan outstanding per unique borrower at Rs 55,585, followed by Assam at Rs 48,578.

Alok Misra, CEO & director, MFIN, said: “It is heartening that the green shoots seen at the end of Q2 have proved to be true and sector disbursements are reaching almost at pre-Covid levels, backed by increased demand for loans to restart livelihoods. The disbursements during Q3FY21 are around 96% of Q3FY20, indicating that it should reach normal levels by the end of Q4FY20-21.”

Lenders and investors continued to show full confidence in the microfinance sector as evident by the debt funding going up 10.4% as compared to the previous quarter and equity moving up 16.6% compared to corresponding quarter last year, Misra said.