Indian microfinance loans grew 29% in Q1 of this fiscal

Ahead of the launch of the Bharat Microfinance Report here later this week, the Microfinance Institutions Network (MFIN) has said the organised industry in this segment has grown by 29 per cent through loan disbursements in the April-June quarter.

"The microfinance industry has seen a substantial growth over the last one year. With the increase in number of branches, MFIs have been able to increase their outreach thus expanding their beneficiary base," MFIN -- the self-regulatory body of the Reserve Bank-regulated non-banking finance companies (NBFCs) and microfinance institutions (MFIs) -- said in a statement here, releasing their 18th Micrometer report on the industry.

"Total number of loans disbursed has also seen an increase of 29 per cent which significantly contributed to the expansion of the sector," MFIN Chief Executive Ratna Vishwanathan said.

"Overall, the growth has been healthy and it is an indicator of the fact that confidence in the sector has been growing and there is an evident interest in greater investments in NBFC MFIs," she added.

In its report for the first quarter of 2016-17, MFIN said the industry has experienced a growth of 89 per cent compared to the first quarter of 2015-16, and has grown by 9 per cent over the last quarter.

The latest Micrometer report is based on data collected from 57 NBFC-MFIs, all of whom have either received or applied for NBFC-MFI registration from the Reserve Bank of India, MFIN said.

The aggregate gross loan portfolio of MFIs stood at Rs 60,165 crore in the first quarter of the current financial year, as compared to Rs 31,869 crore of the corresponding period in the last fiscal, it added.

The gross loan portfolio of MFIs stood at Rs 53,233 crore as on 31 March 2016, up nearly 84 per cent from Rs 28,940 crore a year ago. In fiscal 2015, the gross loan portfolio grew about 48 per cent, while in the previous year growth was at 69 per cent, according to MFIN.

"The transition of Bandhan, one of the largest MFIs into an universal bank and with 8 NBFC-MFIs transforming into Small Finance Banks (SFBs) will have a significant impact on the microfinance sector," the report said.

Bandhan, accounting for 25 per cent portfolio of NBFC-MFI industry converted into a Bank in August 2015, and 8 NBFC-MFIs accounting for another 50 per cent portfolio of the sector are in the process of transforming into SFBs within the next 3 to 6 months, MFIN said.

"A fundamental challenge for micro-credit is going to be the increasing flow of money into the system," the MFIN report said.

However, an over supply of money will also open up a much wider range of financial services to low income populations and provide product diversity which is limited in the present dispensation of a mono-line credit product," it added.

--IANS

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