Banks’ microfinance gross loan portfolio grows, SFBs see de-growth: Report

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During the third quarter of FY21, the market share of banks and SFBs stood at 41.7% and 16.9%, respectively, in the microfinance space. Between Q4FY20 and Q3FY21, NBFC-MFIs' market share stood almost the same at around 30%, while it grew to 30.6% at the end of Q4FY21.

“Delinquency was higher in Q3 and Q4 of FY20-21 compared to pre-Covid levels. We hope to see these numbers move back to their historic levels in coming quarters,” Jain said.The portfolio outstanding of microfinance sector stood at Rs 2.54 lakh crore as of March 2021, with 10% quarter-on-quarter growth and 8.4% year-on-year growth.

The gross loan portfolio (GLP) of banks in the microfinance sector grew 15.5% year-on-year to Rs 1.06 lakh crore at the end of the previous fiscal while that of small finance banks (SFBs) de-grew 6.6% y-o-y to Rs 41,708 crore, according to a report published by credit bureau CRIF High Mark.

The 15th edition of CRIF MicroLend, released on Thursday, showed that banks continued to dominate the microfinance market with a portfolio share of 42% at the end of FY21, up from 39.4% in FY20. Significantly, SFB’s market share in the last fiscal declined to 16.4% from 19.1%.

During the third quarter of FY21, the market share of banks and SFBs stood at 41.7% and 16.9%, respectively, in the microfinance space. Between Q4FY20 and Q3FY21, NBFC-MFIs’ market share stood almost the same at around 30%, while it grew to 30.6% at the end of Q4FY21.

Interestingly, earlier this month, P N Vasudevan, managing director and CEO of Equitas Small Finance Bank, said its conscious plan to grow the unsecured micro finance book at a “slower pace’ compared to the rest helped mitigate the overall credit cost impact. “As of March 31, 2021, the unsecured microfinance advances were 18% while the remaining 81% were secured loans. The least impacted product, small business loans secured by house property, constitutes 45% of the total advances,” Vasudevan said.

“Microfinance industry demonstrated strong resilience and recovered in Q2 after muted business in Q1FY20-21. Loan disbursements in Q3 and Q4 of FY21 were similar to previous year’s respective quarters,” said Vipul Jain, head of products, CRIF High Mark, while releasing the report.

The portfolio outstanding of microfinance sector stood at Rs 2.54 lakh crore as of March 2021, with 10% quarter-on-quarter growth and 8.4% year-on-year growth.

“Delinquency was higher in Q3 and Q4 of FY20-21 compared to pre-Covid levels. We hope to see these numbers move back to their historic levels in coming quarters,” Jain said.

The report said early delinquency (1- 30 days) reduced by 3.6% in March 2021 compared to December 2020 from 8.7% to 5.1%. Microfinance loans with repayment delays of over 30 days (30+% delinquency) remained high for West Bengal, Assam and Maharashtra.

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