Micro loans grow 27% in March quarter, stress levels inch up: Report

The micro loans portfolio of various lenders grew by 27 per cent year-on-year for the March 2024 quarter, a report said on Tuesday.

After remaining stable or improving over the last many quarters, the stress levels in terms of loan default inched up marginally during the quarter, the report by credit information company Crif High Mark said.

At a time when the regulator is flagging concerns on unsecured loans, the data pointed out that personal loan outstandings of microfinance borrowers witnessed the second fastest growth among other retail assets with a portfolio growth of over 38 per cent.

The gross loan portfolio grew 28 per cent to Rs 4.42 trillion in December, the report said, adding that the growth was 8.5 per cent as compared to the preceding December quarter figure.

The top 10 states account for 83.5 per cent of the Gross Loan Portfolio (GLP), it said, adding that West Bengal, Bihar and Uttar Pradesh posted the fastest growth during the January-March period.

However, the proportion of loan assets overdue for the duration between 31 days and 180 days grew to 2.1 per cent in March from the 2 per cent level in December 2023, the report said.

Tirunelveli district was the worst performer nationally on asset quality, followed by Coimbatore and Madurai, making Tamil Nadu home to the three top districts where microlenders are facing maximum stress.

Tamil Nadu also topped nationally on the average balances per account front, with an outstanding of Rs 62,200 per borrower.

The report said borrowers with a higher number of active loans have higher delinquency and added that over 12 per cent of the borrowers have four or more active loans. Karnataka leads the states where borrowers have the maximum active loans.

It said 14.2 per cent of the MFI borrowers have an active retail loan, which is marginally lower than the 14.9 per cent in the year-ago period.

However, personal loans in the concerning unsecured lending segment have witnessed the second fastest growth at 38 per cent, the data said, adding that property loans grew the fastest at over 41 per cent.

Gold loans continued to be the favourite retail lending product preferred by the MFI borrowers, with a portfolio outstanding of Rs 35,679 crore with 41.2 lakh active loans.

Among the lenders, the Non-Banking Finance Company-MFI segment has the highest market share at 39.2 per cent, followed by banks at 33.2 per cent and Small Finance Banks at 16.9 per cent, the report said.