Microfinance industry AUM up 22% at Rs 1.4 trillion till June, shows data

The Asset Under Management (AUM) of the microfinance industry (MFI) has increased by 22.8 per cent compared to June 30, 2023, and decreased slightly by 0.8 per cent compared to March 31, 2024, according to the data shared by Microfinance Industry Network (MFIN), a microfinance industry association and an RBI-recognised self-regulatory organisation, in its 50th edition of Micrometer for Q1 FY24-25 on Friday.

The report further added that the AUM of MFIs is Rs 1,44,797 crore as on June 30, 2024, including an owned portfolio of Rs 1,16,478 crore and a managed portfolio (off-balance sheet) of Rs 28,319 crore. The owned portfolio of MFIN members is 69 per cent of the NBFC-MFI universe portfolio of Rs 1,68,747 crore.

 

The loan amount of Rs 26,223 crore was disbursed in Q1 FY24-25 through 56.8 lakh accounts, including disbursement of owned as well as managed portfolios.

The report pointed out that this is 1.5 per cent higher than the amount disbursed in Q1 FY23-24. However, the average loan amount disbursed per account during Q1 FY24-25 was Rs 46,132, which has increased by around 9.3 per cent in comparison to the same quarter of the last financial year. Moreover, as on June 30, 2024, the borrowings outstanding were Rs 1,01,020 crore, with banks contributing 62.1 per cent of borrowings.

The microfinance lenders consist of banks, finance companies working as microfinance institutions (NBFC-MFIs), small finance banks (SFBs), finance companies with a certain portfolio of microfinance loans, and others.

In June 2024, MFIN data said that the microfinance loan portfolio of lenders rose by 24.5 per cent year-on-year (Y-o-Y) in 2023-24 to Rs 4,33,697 crore.

Earlier this year, RBI Deputy Governor M Rajeshwar Rao came down heavily on MFIs for charging higher rates to borrowers, thus cautioning against irresponsible practices.

He expressed concern over some MFIs disproportionately increasing their margins under the new regime, warning that misuse of regulatory freedom would prompt regulatory action.

“It has been observed that while the lenders were quick to pass on the increased costs to borrowers, they have been reluctant to pass on the benefits envisaged under the new framework. Some MFIs have increased their margins disproportionately under the new regime. We are not oblivious to the misuse of the freedom provided to the microfinance sector and irresponsible practices would compel us to act,” he said.