Microfinance market expands by a fourth in FY24 with asset quality showing significant improvement
microfinance market expanded by a fourth in FY24 with asset quality showing significant improvement following better loan recovery from the field and several rounds of balance sheet cleansing.
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The sector's gross loan portfolio grew 24.5% year-on-year to Rs 4.34 lakh crore at the end of March with bad loan ratio falling to 7.9% of it, from 8.6% a year back, according to Microfinance Institutions Network.
The bad loan ratio was highest at 10.6% as on December 31, 2022 on account of pandemic-induced default.
Industry leaders said that the sector's asset quality stress has reduced over time with the lenders writing off bad loans from their portfolio as balance sheet exercise. They said that write-offs of bad loans are technical in nature and they would continue with their recovery attempt.
The microfinance industry served 7.8 crore unique borrowers, through 14.9 crore loan accounts, which increased by 15.4% over the past 12 months.
In terms of regional distribution, East, Northeast and South account for 62% of the total portfolio with Bihar remaining the largest state in terms of portfolio outstanding followed by Tamil Nadu and Uttar Pradesh.
NBFC-MFIs as a group remained the largest provider of micro-credit accounting for 39.4% of total industry portfolio, followed by banks with 33.2% share,
