 "Microfinance sector's disbursements up 30% in Q1FY24, shows data")
The microfinance sector's disbursements crossed Rs 76,000 crore mark in the first quarter ended June 2023 (Q1FY24), showing growth of 30 per cent on a year-on-year (Y-o-Y) basis, according to Sa-dhan data.
Among the lenders, finance companies working as microfinance institutions (NBFC-MFIs) disbursed a maximum of Rs 32,356 crore, closely followed by banks at Rs 24,511 crore during April-June 2023. Microfinance loans, being short-duration credit products, achieve higher volumes with prudent lending practices, helping to grow a quality book.
The top five states in terms of disbursement during Q1FY24 were Bihar, Tamil Nadu, Uttar Pradesh, Karnataka, and West Bengal. These five states also accounted for 59 per cent of the total disbursement.
While growth has been robust, Sa-dhan, the industry lobby group for microfinance lenders (MFIs), has also flagged concern about an organised move by some to mislead vulnerable people. There has to be constant vigilance by law-enforcing agencies against such unscrupulous elements who can destroy the credit culture, it said.
There are issues at the state level, like in Rajasthan, Punjab, and Orissa, where local leaders and the press attribute some of the unfortunate incidents that have happened to people in those areas to microfinance, causing delinquencies, senior MFI executives said.
Referring to the uptick in the MFI sector, Jiji Mammen, Executive Director and Chief Executive Officer of Sa-dhan, said, "Although the first quarter is usually a dull one for the industry, microfinance continued to perform well, indicating that the overall outlook for the year is very positive."
The micro-loan portfolio of all lenders grew by 21 per cent on a year-on-year basis to Rs 3.58 trillion as of June 30, 2023. Sequentially, the portfolio increased by over Rs 7,000 crore in Q1 for the first quarter period of the financial year 2023-24.
Sa-dhan said there has been significant improvement in portfolio quality in the microfinance sector during FY24. The portfolio at risk (PAR) with 30-day-plus due declined to 1.97 per cent in June 2023 from 5.0 per cent a year ago.