However, the lending universe at the bottom of the pyramid remains skewed with the top 10 states including Tamil Nadu and Uttar Pradesh accounting for 80 per cent. microfinance This year according to a report by Portfolio, credit bureau CRIF High Mark.
Data compiled by credit bureaus indicates that asset quality is improving in this area. Loans payable for more than 30 days increased from 6% by March 2022 to 5.8% by June 2022. Portfolios that have outstanding loans for more than 90 days have improved from 2.7% to 2.2% during the same period.
The borrowers are also returning to the market after the post-Covid recession. The live customer base grew 1.6% quarter-on-quarter (qoq) and 5.1% year-over-year (year-on-year). Rural markets grew by 0.2% on a quarterly basis till June’22, while urban markets declined by 0.8%. Gross loan portfolio for rural markets grew by 22% and for urban markets by 13% as compared to June’21.
Banks continued to dominate the market with a portfolio share of 35.6%, although their portfolio size declined by 5.6% during the year. Gross loan portfolio of NBFC MFIs grew by 2.2% QQ as against 2.6% for small finance bank (SFB) as of June ’22. The annual growth was around 33.0% for NBFC MFIs, 2.1% for banks, 22.5% for SFBs
The report said that 45% of banks’ portfolios included ticket size loans of more than Rs 50,000, while NBFCs accounted for 27.2% for MFIs and 31.3% for SFBs.
Top 10 states- Tamil Nadu, Bihar, West Bengal, Karnataka, UP, Maharashtra, Madhya Pradesh, Orissa, Rajasthan and Kerala account for 84% of GLP as on June 22.
The microfinance sector is dominated by the eastern region (32.6%) followed by the south (26.7%), with 43.2% of the banks’ portfolio concentrated in the eastern region as of June 22. NBFC MFIs formerly held 28.2% stake. The concentration of SFB in the south is 36.3%.