India’s microlending industry witnessed slower growth and recovery problems in the first quarter of the financial year due to multiple industry factors. “There has been an overall deterioration in the recovery position, with the PAR 90+ dpd recording 1.2% from 0.9%,” the industry body said in a press release.
Sa-Dhan is the largest microlending industry association in the country.
According to data compiled by Sa-Dhan, the outstanding for Q1, FY 2024 is close to Rs4.33 lakh crores as against Rs 4.42 lakh crores recorded for Q4 of previous FY, the release said. Citing the data sourced from Criff Highmark, Sa-Dhan said the microcredit outstanding is about 20% higher than the previous year but slightly reduced (-2%) from March ‘24.
Further, the NBFC-MFIs continued tooccupy the largest share of the pie with 40%, followed by banks at 32% and SFBs at 18%.
‘The first quarter of the current financial year has witnessed a slower growth, on account of various factors including a harsh climate like heat waves in various regions of India, general elections, funding issues and also overheating of credit in some geographies.’ said Jiji Mammen, ED & CEO, Sa-Dhan.
Mammen added that there has been a consensus among the microfinance leaders on the need to slow the pace as was reflected from of the discussions during the discussions in SANKALP 2024 organised by Sa-Dhan in Bengaluru during July.
The growth will pick up but is expected to grow at a moderate pace during the year, keeping the responsible lending guidelines issued by the S ROs and the RBI,” Mamman added.
In order to sustain credit growth, Sa-Dhan has initiated steps like promoting climate-resilient agricultural technology with the support from donors like GIZ and Tata Trust, Mammen said.
Also, Sa-Dhan is working to promote micro-enterprises among SHGs and JLG members with the help of SIDBI and BMGF. It is also working on promoting affordable housing for poor. This will help increase credit and income for the borrowers, the industry body said.
Key Highlights of the quarter data
➢ The Loan Portfolio of all microlenders as of June’24 is over ₹4.33 lakh crores, growing 20% compared to the corresponding quarter of the previous year.
➢ The number of loan accounts serviced by all microlenders stands at 1,593 lakhs, posting a Y-o-Y growth of 8.8%.
➢ There has been slight deterioration in the portfolio quality under all buckets except 180+ dpd during Q1 of FY 24-25, compared to the corresponding quarter Q1 of FY 23-24, PAR 30+ dpd increased to 2.7% from 2%, PAR 60+ dpd slipped to 1.9% from 1.4%, PAR 90+ dpd increased to 1.2% from 0.9%. In contrast, PAR 180+ dpd has slightly improved to 9.1% from 9.7%.
➢ The total disbursement during quarter by all microlenders is ₹79,100 Cr. During Q1 of FY ‘24-25, a slight increase of 0.85% compared to the same quarter of FY23-24.
The market share of micro lenders in terms of portfolio shows that NBFC-MFIs continue to account for the largest share at 40%, followed by Banks at 32%, SFBs at 17%, NBFCs at 11%, and Non-Profit MFIs at 0.5%.
➢ The top five states in terms of portfolio outstanding are Bihar (₹65,342 Cr.), Tamil Nadu (₹57,067 Cr.), Uttar Pradesh (₹46,028 Cr.), Karnataka (₹42,313 Cr.), and West Bengal (₹38,256 Cr.). These top five states account for approximately 58% of the industry’s total portfolio.
➢ Among the major states in terms of portfolio (Y-o-Y growth), Karnataka has recorded (31%) growth, followed by Uttar Pradesh (29%), Bihar (27%) and Andhra Pradesh (26%), respectively above the industry average (20%).
➢ Average Ticket Size (ATS) for the industry in Q1 of FY 24-25 is ₹30,125 compared to ₹27,967 in Q1 of FY 24-25, registering 7.7% Y-o-Y growth; the ATS has increased across all microlender