Bad to worse: Microfinance sector NPAs hit ₹50,000 crore at the end of December last year
Non-performing assets in the microfinance sector surged to an all-time high of ₹50,000 crore, or 13% of the gross loans, at the end of December last year, even as the RBI reduced the need for higher capital allocation against risky unsecured assets.
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Moreover, the portfolio at risk that may turn NPA rose to 3.2% of the total loans from 1% a year back, reflecting a severe deterioration in overall credit discipline.
«We remain cautious on the microfinance segment. While the slippages may get elevated for another quarter, our customer base is showing early signs of stability which should start reflecting from Q1 onwards,» IndusInd Bank managing director Sumant Kathpalia said in a post-earnings call with analysts. The bank has a sizeable amount of micro loans in its books.
The estimate of bad loans is based on data from credit bureau Crif High Mark, which does not provide the overall NPA figure but calculates the portfolio at risk for different buckets. As per its estimates, the portfolio at risk for 91 days to 180 days was 3.3% as of December 31; for more than 180 days, it was 9.7%. This means, the share of the portfolio which remained unpaid after 90 days of the first due date was 13%. Loans not serviced for more than 90 days are classified as NPAs.
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