 "The limit of loans under the Pradhan Mantri Mudra Yojana (PMMY) was doubled to Rs 20 lakh recently, inserting a new category—Tarun Plus. Launched 10 years ago, the scheme intended to provide microfinance to small entrepreneurs. However, the number of")
The gross loan portfolio (GLP) of microfinance institutions (MFIs) shrunk by 3.86 per cent sequentially to Rs 4.08 trillion in September from Rs 4.24 trillion in June as lenders slammed brakes on disbursements to contain stress and resorted to tight underwriting.
However, the GLP grew by 8.5 per cent on a year-on-year (Y-o-Y) basis over Rs 3.76 trillion in September 2023, according to Micro Finance Institution Network (MFIN) data, which covers a range of lenders, including banks, NBFC-MFIs and small finance banks etc.
The portfolio of non-banking financing companies working as MFIs (NBFC-MFIs) stood at Rs 1.4 trillion at the end of September, down from Rs 1.45 trillion in June. However, the portfolio grew by 11.9 per cent Y-o-Y from Rs 1.25 trillion a year ago.
The disbursements of MFIs declined sequentially to Rs 68,387 crore in the quarter ended September (Q2FY25) from Rs 76,567 crore in quarter ended June. The disbursements in Q2FY25 were also lower than Rs 76,054 crore in the same quarter of FY24.
Alok Misra, chief executive & director, MFIN said, “Considering the ongoing challenges, the industry decided to moderate the disbursement growth, focus on strengthening underwriting as per MFIN guardrails and repayment collections.”
The bad loans, share of loans of MFIs which are due for 91-180 days, rose to 1.9 per cent in September from 1.2 per cent in June and 1.0 per cent a year ago.
“The credit quality is expected to stabilise in next few months post stronger underwriting, bumper kharif crop and ongoing strong trends in Rabi sowing,” Misra added.
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As on September 30, the outstanding borrowings of NBFC-MFIs were Rs 97,315 crore, of which banks contributed 59.8 per cent, followed by 16.9 per cent from non-bank entities.
The External Commercial Borrowings (ECBs) had 10.1 per cent share, followed by 8.8 per cent from All India Financial Institutions (AIFIs) and 4.5 per cent from other sources, MFIN data showed.
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