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IL&FS-led liquidity woes, Aadhaar ban roil NBFCs, micro-lending dips by 15%

Disbursements stood at Rs 41,840 crore for the third quarter of the current financial year, down from Rs 49,450 crore in the preceding three months

Press Trust of India  |  Mumbai 

Representative image
Representative image

The at triggered by the bankruptcy of IL&FS and the verdict banning use of the data for financial transactions have led to a 15 per drop in micro-lending by financial institutions for the December 2018 quarter.

Disbursements stood at Rs 41,840 crore for the third quarter of the current fiscal year, down from Rs 49,450 crore in the preceding three months, show the data from the information company

"There were two major changes during the quarter which may have resulted in the decline. First was the liquidity trouble, which subsided towards the end of the quarter, and the second was the verdict," agency told

Garg said the verdict, which prohibits all financial institutions including companies from storing a users data, resulted in a fall in disbursements and also resulted in a marginal fall in the share of NBFC-MFI lenders in the microloans to 34.79 per in the December quarter as against 35.32 per in the March 2018 quarter.

On the liquidity troubles, he said a majority of lending happens based on funding support from outside which means the overall liquidity has a bearing on the disbursements, pointing out that all other things including MFIs networks have been intact.

The company classifies micro-loans as ones which are given on a joint group lending model.

On the asset quality front, there has been an improvement in the loans overdue for 31 to 180 days period, to 1.05 per cent from 1.59 per cent as of March 2018, but has seen some spike in stress.

Non-payment of up to 30 days has shot up to 2.9 per cent in as of end December from 0.92 per cent in March, the company said, attributing it to the cyclone Gajas after-effects, it said, adding Kerala, which had seen a huge spike in stress following the worst deluge in a century last August, is tempering down now.

Meanwhile, it what may result in greater concerns, there has been a spike in a number of borrowers having more than four loans in to 7.62 per cent as of December from 3 per cent in March.

Garg said Tamil Nadu is already a mature market from an MFIs perspective, but aggressive play by banks, which are allowed to sign up as many borrowers as possible unlike NBFC-MFIs where a borrower cannot borrow from more than two entities, may have resulted in the increase.

Tamil Nadu, Bengal, Karnataka, and are the five biggest states, accounting for 55 per cent of the gross loan portfolio.

Tamil Nadu and are the fastest growing states, Garg said, attributing the growth in the northern state to under-penetration and the movement of lending westward from which has been developed market.

First Published: Sun, February 17 2019. 09:50 IST