Debt funding in MFIs up 63% to Rs 35,759 cr in FY19, equity rises 42%

Liquidity improved, despite a challenging scenario, due to better portfolio quality. Barring few pockets where recovery was impacted due to debt waivers, overall delinquencies came down: Experts

Banks and financial institutions disbursed about of Rs 35,759 crore to microfinance institutions in FY19, representing a growth of 63 per cent over FY18, according to a report by MFIN (Microfinance Institutions Network).

In tandem, the total equity grew by 42 per cent during the same period to Rs 14,206 crore.  

According to experts, improvement in liquidity, despite challenging situation, was possible on account of better portfolio quality. Barring a few pockets, where recovery was impacted due to debt waiver schemes, the overall delinquencies came down,

According to Harsh Shrivastava, CEO, MFIN, “In 2018-19, microfinance in India showed rapid, regionally-balanced, and resilient growth. The industry showed its resilience by growing steadily in spite of liquidity squeeze that all NBFCs faced in Q3 and natural disasters like cyclones and drought.”

In Q4 of FY19, the microfinance industry witnessed a growth of 38 per cent over Q4FY18 with the total loan portfolio (GLP) at Rs 1,87,386 crore as on 31 March 2019, according to the 29th MFIN Micrometer.  

Non-Banking Finance Company-Microfinance Institutions (NBFC-MFIs) hold the largest share of portfolio in micro-credit with total loan outstanding of Rs 68,868 crore, which is 36.8 per cent of total micro-credit universe.  Banks constituted about 32.6 per cent, Small Finance Banks about 18.5 per cent, NBFCs’ account for 11 per cent and Non-profit MFIs account for 1.1 per cent of the total portfolio.

In terms of regional distribution of portfolio (GLP), East and North East accounts for 38 per cent of the total NBFC MFI portfolio, South 24 per cent, North 14 per cent, West 15 per cent and Central contributes 9 per cent.

“Apart from the growth in loan size and loan accounts, the growth of the staff of NBFC-MFIs was also heartening at 34 per cnet, now totaling to 1,04,973 people.  Eastern India’s growth continues with much on account of Bihar and Odisha,”  according to Srivastava.