 "Microfinance sector lent Rs 3.48 trn in FY23, NBFC-MFI topped: Report")
The microfinance sector provided loans worth Rs 3.48 trillion to 660 million clients in Financial Year 2022-23 (FY23), said a report on Wednesday.
Non-banking finance companies-microfinance institutions (NBFC-MFI) dispersed the largest amount of credit among regulated entities (REs), said the report by the Microfinance Industry Network (MFIN).
The NBFC-MFI sector had lent Rs 138,310 crore as on March 31, 2023. It was followed by banks, which had a loan portfolio of Rs 119,133 crore. The two sectors together accounted for 73.90 per cent of the total lending by microfinance institutions. Small Finance Banks (SFBs) comprised the third largest sector, lending Rs 57,828 crore.
The average ticket size of microfinance loans increased 6.3 per cent to Rs 41,391 crore in FY23 from Rs 38,929 crore in the year-ago period.
Larger loans are operationally more viable and profitable for entities as operational expenses are directly proportional to the number of clients served irrespective of the ticket size.
Lending has recovered after the coronavirus pandemic in terms of funding, portfolio quality and client addition by MFIs. Regulations have strengthened governance in microfinance operations, said the report.
MFIN estimated that the microfinance industry is worth Rs 13 trillion in FY 23-24.