NPAs rise in tandem as MFIs gross loan portfolios grow by 29% in FY20

Even as the gross loan portfolio of the microfinance sector registered a growth of 29.26 per cent on a year-on-year basis last financial year, the portfolio at risk continued to be on the higher side.

According to data released by MFIN (Microfinace Institutions Network), the microfinance representative body, the gross loan portfolio (GLP) of the MFI sector as on March 31, 2020 was Rs 2,31,788 crore, against 1,79,314 crore as on 31st March 2019. 

At the same time, the PAR>30 (portfolio of risk for more than 30 days), increased from about one per cent at the end of Q4 of FY19 to nearly 1.79 per cent at the end of Q4 of FY20.

“The PAR figures continue to show an increasing trend as compared to previous quarters, but the portfolio health is still within acceptable limits,” according to MFIN publication.

During FY20, NBFC-MFIs received a total of Rs 42,150 crore in debt funding (from banks and other financial Institutions). This represents a growth of 33 per cent compared to FY18-19, when they received Rs 31,688 crore.

Banks hold the largest share of portfolio in microcredit with total loan outstanding of Rs 92,281 crore, which is 39.8 per cent of total micro-credit universe. NBFC-MFIs are second largest provider of micro-credit with a loan amount outstanding of Rs 73,792 crore, accounting for 31.8 per cent to total industry portfolio. Small finance banks have a total loan amount outstanding of Rs 40,556 crore with total share of 17.5 per cent. NBFCs account for another 9.8 per cent and other MFIs account for 1.1 per cent of the overall portfolio.

Five top states in terms of loan amount outstanding are Bihar, Karnataka, Tamil Nadu, Maharashtra and Odisha. They account for 49 per cent of GLP and top 10 states account for 79 per cent of the total loan amount outstanding.

During FY 19-20,  NBFC-MFIs disbursed loans worth Rs 77,072 crore, nearly 23 per cent in loan amount disbursed. Top 10 MFIs in terms of loan amount disbursed accounted for 70 per cent of industry disbursements in FY19-20.

Harsh Shrivastava, MFIN CEO said, “In a difficult year, it is heartening that microfinance was able to get more liquidity from its lenders and in turn increase its outreach by adding new branches, hiring more staff, and thus reach more borrowers.”

Average loan disbursement per account for FY 2019-20 stood at Rs 27,754 as compared to Rs 26,196 for FY2018-19.

More than 92 per cent of MFI loan disbursement in FY20 were in cashless mode, as compared to 85 per cent in FY19.