Microfinance firm CreditAccess says asset quality, overdue loans moderating

Company expresses concern about business growth in Karnataka where it has its headquarters

Microfinance lender CreditAccess Grameen said on Thursday the asset quality of its portfolio is stabilising and rise in overdue loans moderated in February, citing improved collection and “strong control” on employee attrition for the improvement.

 

The portfolio at risk (PAR), the value of a loan portfolio overdue or unpaid for 15 plus days, across states except Karnataka, where it has its headquarters in Bengaluru, declined from 1.06 per cent in December 2024 to 0.55 per cent in February.

 

Collection efficiency was above 99.5 per cent in February, said the company in a filing with BSE. Efficiency in Karnataka declined from about 99.4 per cent in December 2024 to 95.1 per cent in early February. It improved to 98.0 per cent in the last week of February.

 

PAR 15 plus rate for overall portfolio including Karnataka rose from 0.95 per cent in December 2024 to 1.02 per cent in February. It has enhanced collections efforts with “strong control” on employee attrition. Employee base increased from 19,333 in December 2024 to 20,265 in February, said CreditAccess Grameen. Its stock was trading 8.12 per cent higher at Rs 995.35 per share on BSE at 2.25 pm.

 

New delinquency accretion rate reversed in mid-November 2024 and “positive business momentum” resumed in December, said Udaya Kumar Hebbar, managing director of CreditAccess Grameen, in January 2025 while announcing results for the third quarter of Financial Year 2025-25 (Q3 FY25).

 

The lender said its loan portfolio grew from Rs 24,810 crore in December 2024 to Rs 25,395 crore in February, driven by expansion outside Karnataka. It added more than 1500,00 lakh new borrowers between January and February 2025.

 

The state government promulgated The Karnataka Micro Loan and Small Loan Prevention of Coercive Actions) Ordinance in February to address concerns like the vulnerability of borrowers, unjustified/usurious rates of interest, multiple loan facilities and coercive recovery methods.

 

While the ordinance excludes entities regulated by the Reserve Bank of India, it had hurt CreditAccess Grameen’s business in the state. Delinquencies increased between January and Feb 2025 due to operational ambiguities in anticipation of the ordinance and “on-ground sensitivities”, it said.

 

The loan portfolio is expected to grow 7-8 per cent in FY25 and asset quality to normalise by Q1 FY26. CreditAccess Grameen expects 18-20 per cent growth in assets under management in FY26. Profitability is expected to normalise by Q2 FY26.