Microfinance industry sees flat YoY growth in September 2021: Report

Credit and Finance for MSMEs: Disbursements were up YoY 96 per cent by value and 94 per cent by volume during the September quarter from the corresponding September 2020 quarter.

Credit and Finance for MSMEs: The microfinance industry has recorded a flat year-on-year (YoY) growth as of September 2021 quarter from the year-ago period as the portfolio outstanding stood at Rs 2,26,123 crore in comparison to Rs 2,27,843 crore during September 2020 quarter, according to the data from the latest Equifax and SIDBI report on microfinance industry launched on Monday. Quarterly, the industry saw 2 per cent growth from Rs 2,22,060 crore in portfolio outstanding in June 2021.

Only non-banking financial companies-microfinance institutions (NBFC-MFIs) witnessed YoY growth in portfolio outstanding at 13 per cent while banks and not-for-profit MFIs saw flat growth. Small finance banks (SFBs) and NBFCs registered YoY degrowth from 18 per cent to 16 per cent and 9 per cent to 7 per cent respectively during the said period.

“Growth has remained flat mainly due to a decline in disbursements during the year even as livelihood activities were yet to resume to the full extent. Portfolio outstanding is a figure that is also based on the disbursements of the previous quarters. Overall things are slowly improving and if the situation continues to get better, there could be 12-15 per cent by March 2022,” P. Satish, Executive Director at industry body of MFIs in India Sa-Dhan told Financial Express Online.

Disbursements were up YoY 96 per cent by value and 94 per cent by volume during the quarter from the corresponding quarter during July-September 2020. 98 lakh loans amounting to Rs 34,101 crore were disbursed as of September 2020 vis-a-vis 1.9 crore loans involving Rs 66,681 crore as of September 2021. Banks and NBFC-MFIs had disbursed a maximum amount of Rs 27,439 crore and Rs 23,838 crore respectively. Disbursements during September and June quarters were lower in comparison to other quarters during the year. Lenders had disbursed 78 lakh loans in the June quarter while 196 lakh loans were disbursed in the December quarter and 236 lakh loans in the March quarter. presents its flagship event The ScaleUp Summit exclusively for MSME owners to learn from each other and grow their business. Please join us by registering here. 

“Microfinance has evolved as an important financial delivery mechanism to promote financial inclusion. Due to the hardship and loss of livelihoods caused by the pandemic, the sector needs a renewed focus of all the stakeholders. The declining delinquency trends in the sector in September 2021 quarter is also encouraging for the future growth perspective,” said Sivasubramanian Ramann, Chairman & Managing Director, SIDBI in a statement.

NBFC-MFIs had disbursed 69 lakh loans in comparison to 77 lakh loans disbursed by banks in September 2021 quarter in comparison to 32 lakh loans by NBFC-MFIs and 46 lakh loans by banks in September 2020 quarter. Also, 1-29 days past due (DPD) delinquencies declined significantly from 15.35 per cent during September 2020 quarter to 8.64 per cent during September 2021 quarter. 1-179 DPD delinquencies also declined marginally from 19.84 per cent to 18.77 per cent.  

“The faster recovery in Microfinance disbursements after the second wave of COVID impact clearly demonstrates the resilience of the industry in the country,” said KM Nanaiah, Managing Director, Equifax Credit Information Services and Country Leader, Equifax India and MEA. 

Tamil Nadu, West Bengal, Bihar, Karnataka and Uttar Pradesh were the top five states in terms of portfolio outstanding as of September 2021. Tamil Nadu was the leading state with a portfolio outstanding of around Rs 29,000 crore.  

“Microfinance industry witnessed the slowdown due to the nationwide lockdown from March 2020. Loan sourcing contracted in October 2019 to September 2020 by 28% and 24% in terms of volume and value respectively from October 2018 to September 2019. However, the industry is back to expansion mode and it grew by 35% and 37% by volume and value respectively in October 2020 to September 2021,” the report said.

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