MFIN report decodes how microfinance loans in India grew in second quarter of FY23

Microfinance loans in the country grew by nearly 11 per cent to Rs 71,916 crore during the second quarter of the current fiscal, industry data showed.

Microfinance loans worth Rs 64,899 crore were disbursed during the same period a year ago.

In terms of volume, a total of 1.81 crore loans were disbursed during Q2 FY2022-23, as against 1.85 crore loans in Q2 FY2021-22, as per the latest report by Microfinance Institutions Network (MFIN).

According to the MFIN Micrometer Q2 FY2022-23 report, the country's microfinance loan portfolio stood at over Rs 3 lakh crore at end-September 2022, serving 6.2 crore unique borrowers with 12 crore loan accounts.

"The overall microfinance industry currently has a total gross loan portfolio (GLP) of Rs 3,00,974 crore as on September 30, 2022... An increase of 23.5 per cent year-on-year over Rs 2,43,737 crore as on September 30, 2021," the report said.

Of the total micro loans outstanding, the largest share of 37.7 per cent is held by 13 banks, amounting to Rs 1,13,565 crore.

NBFC-MFIs are the second largest provider of micro-credit with a loan amount outstanding of Rs 1,10,418 crore, accounting for 36.7 per cent of total industry portfolio.

The average loan disbursed per account during the quarter stood at Rs 40,571, up by around 12 per cent against the same quarter of FY21.

Among others, small finance banks (SFBs) have a total loan amount outstanding of Rs 50,029 crore, constituting a share of 16.6 per cent.

Non-banking finance companies (NBFCs) constitute another 7.9 per cent and other micro finance institutions (MFIs) account for 1.1 per cent of the microfinance sector.

The report said microfinance active loan accounts increased by 14.2 per cent during past the 12 months to 12 crore as on September 30, 2022.

In terms of regional distribution of GLP, east, northeast and south accounted for 63.9 per cent of the total portfolio.

State-wise, Tamil Nadu is the largest state in terms of portfolio outstanding, followed by Bihar and West Bengal.

"In Q2FY23, microfinance industry touched Rs 3,00,974 crore mark of portfolio outstanding. NBFC-MFIs have also collectively crossed the Rs 1 lakh crore mark, though banks still have the majority share in microfinance market.

"The CAGR of the industry in the last five years has been a healthy 22.2 per cent despite two years of disruption due to the pandemic," said Alok Misra, CEO and Director, MFIN.

The growth momentum is likely to pick up further as the estimated credit demand is expected to be Rs 17-20 lakh crore by 2025, he added.

Microfinance industry body MFIN is an RBI-recognised self-regulatory organisation.