Data released by the Reserve Bank of India (RBI) on Tuesday shows that the year 2022 has brought remarkable credit growth for the microfinance sector. The RBI data reveals that the number of loans disbursed by the MFIs or microfinance institutions almost doubled between 2020-21 and 2021-22. Not only in terms of credit growth, but rather the entire sector witnessed 20 per cent  growth in Q2 of FY 22-23, revealed the recent data combined by Sa-Dhan, a Self-Regulatory Organization for the Microfinance Sector. 

Contribution of each segment to the overall growth  

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The portfolio of all lenders including non-banking financial companies (NBFC), NBFC-MFIs, and small finance banks (SFB) recorded double-digit growth. NBFCs and NFPs have shown significant growth of 59.22 per cent and 48.36 per cent respectively, while NBFC-MFIs and SFBs have posted growth of 29.42 per cent and 20.84 per cent  respectively.

“The growth of the overall industry can be attributed to the revival of pent-up demand after the receding of the adverse impact of the pandemic. Moreover, specialized microfinance institutions have tried to build up their outreach to new customers, besides catering to increased credit requirements with the gradual revival of the semi-urban and rural economies,” said Jyoti Prakash Gadia, Managing Director at Resurgent India, a financial advisory firm.

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