This translates to Rs 36,418 crore on gross non-performing assets – an all-time high. This is despite significant write-offs of very sticky loans by lenders as a balance-sheet cleaning exercise.
portfolio The exposure (PAR) for more than 30 days has also increased to 14.5% of the total portfolio of Rs 3 lakh crore. PAR 30+ stood at 13.1% at the end of March 2022, data released by Microfinance Institutions Network (MFIN) showed.
“Regeneration NPA is largely due to pressure on restructured loans,” said the chief executive officer of a microfinance company. “About 30-40% of the restructured loans defaulted in the end,” he said. Another chief executive officer said that the NPA classification rules Another reason behind the increase is the change in interest rates. The central bank said loan accounts classified as NPAs can be upgraded to ‘standard assets’ only if the entire outstanding amount of interest and principal is paid by the borrower. Earlier, NBFCs used to classify such loans as ‘standard’ on part repayment.
Portfolios with an exposure for more than 30 days means interest is not paid on those loans even after 30 days of the due date. The PAR 30+ ratio for banks was highest at 20.9% while it was 13.9% for smaller finance Banks and 10.5% NBFC-MFIs. The ratio was 3.8% for other non-bank lenders and 8.4% for non-profit lenders, MFIN data showed.
The sectoral gross NPA ratio stood at around 10% as on September 30, 2021, while the PAR 30+ ratio stood at 17.1%. reserve Bank of India Restructuring of microfinance loans was allowed to help lenders keep their NPA ratio low.
“On a year-to-date basis the portfolio performance as reflected by PAR > 30 days has improved and will stabilise,” said Alok Mishra, chief executive officer, MFIN.
“The portfolio built post-Covid is doing well and is instilling confidence,” he added.
The overall microfinance industry currently has a total gross loan portfolio of Rs 3.01 lakh crore at the end of September, showing a 23.5% year-on-year growth from Rs 2.44 lakh crore a year ago.
Active microfinance loan accounts grew by 14.2% to 12 crore during the last one year.
Data released a few days ago by Sa-Dhan showed that the microfinance market has grown by 20% to Rs 2.71 lakh crore. An industry association official said that Sa-Dhan does not include loans that are outstanding for more than 180 days (PAR 180+) in the outstanding portfolio. This could be the reason behind the difference between MFIN and Sa-Dhan data.
According to MFIN data, the gross loan portfolio of NBFC-MFIs stood at Rs 1.06 lakh crore as on September 30, showing a growth of 31% year-on-year. Banks hold the largest share of the portfolio in micro-credit with total outstanding loans of Rs 1.14 lakh crore, which is 37.7% of the total microcredit universe.