Microfinance segment showing signs of stress with lenders chasing customers

Padmaja Reddy says while the MFI industry may have grown to Rs 2 trillion, the share of pure-play entities is only Rs 60,000 crore.

Ask Kalpana Pandey if the micro-finance industry is  overheating, and the managing director and chief executive officer (CEO) of CRIF High Mark, says “the system is being designed for overleverage”. An exaggeration? 

According to Microlend, which captures the industry’s trends, the national average ticket-size for microfinance loans rose by 12 per cent year-on-year (YoY) to Rs 32,500 in Q2FY20 while the average exposure per borrower grew by 5.7 per cent to Rs 34,300. Now, one way to look at it is that the universe of borrowers is turning out to be creditworthy; that microfinance institutions (MFIs) are profiling their customers