Microfinance players have already come out of the massive hit they took during the pandemic and are likely to report lower credit cost by the end of this fiscal, as growth momentum is on an upswing, says a report.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

India Ratings has revised the outlook on the microfinance sector to 'improving' from 'neutral' and has also maintained the 'stable' rating outlook for FY24. It expects the sector to notch up high double-digit growth of 20-30 per cent, on improved collections and disbursals. It sees the credit cost to improve to 1-3 per cent from 1.5-5 per cent this fiscal.

Microfinance institutions have already absorbed the impact of the pandemic by the December quarter, India Ratings said in a note on Wednesday. It expects the growth momentum to continue in FY24, as disbursements are picking up, which in turn will lead to higher growth.

According to India Ratings, there are two key risks for the microfinance sector over the next 12-18 months -- inflation and elections. These may impact cash-flows of borrowers in FY24 and in the first half of financial year 2024-25, it said.

Also Read: What is credit card balance transfer? How it can help you save money - Know the details

Read: SBI FD interest rates 2023: India's largest bank hikes fixed deposit interest rate