Microfinance sector contracts below Rs 4 lakh crore amid loan disbursal woes
loan disbursal with several of them completely stopping acquisition of new-to-credit customers amid rising asset quality stress.
The sector's asset quality may have also worsened as collection efficiency has faltered for several lenders.
Heads of the microfinance lenders however expressed hope that the sector would bounce back but it may take a couple of quarters from now. It is now in the process of healing with guardrails being in place to protect it from further degeneration, they said. The sector contributes 2.03% to the country's GDP and supports 13 million jobs.
The outstanding gross microfinance loan portfolio stood at Rs 3.93 lakh crore at the end of November, according to reports submitted to the finance ministry.
The sector's composite gross loan portfolio and loan disbursal numbers at the end of the December quarter are not available yet but business updates by a clutch of small finance banks showed quarter-on-quarter decline in microfinance portfolio.
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