 "The credit bureau CRIF High Mark's latest report on microfinance, ‘Microlend' has it that at end-June 2024, the systemic book at Rs 4.32 trillion, marked a quarter-on-quarter decline of 2.3 per cent even though on a year-on-year basis, it is up 20.3")
The microfinance credit pool rose nearly 10 per cent year on year (Y-o-Y) to Rs 40,840 crore in Uttar Pradesh, indicating an uptick in grassroots lending. The portfolio grew from Rs 37,250 crore in September 2023 to Rs 40,840 crore at the end of September 2024.
The Eastern UP districts lead in total microfinance lending with 46 per cent share, followed by Western UP and Central UP regions with 40 per cent and 14 per cent share, respectively.
According to UP Microfinance Association (UPMA) Chief Executive Officer (CEO) Sudhir Sinha, the microfinance institutions (MFI) lent Rs 7,584 crore in the previous quarter (July-September 2024) in UP.
“Microfinance or micro-credit caters to the bottom-of-pyramid category of borrowers by offering the much-needed institutional lending to low-income individuals and self-help groups (SHG) in the rural and urban areas,” he added.
Since the average ticket size of microfinance loans in UP has jumped almost 15 per cent from Rs 43,484 in September 2023 to Rs 48,471 in September 2024, it reflects that the MFIs are gaining traction in the state.
The microfinance loans were extended by different lending institutions including commercial banks, small finance banks (SFB), non-banking financial companies (NBFC), MFIs, not-for-profit MFIs and NBFC-MFIs.
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NBFCs-MFIs topped the microfinance tally with a total outstanding portfolio of Rs 19,400 crore, followed by banks and SFBs with Rs 12,000 crore and Rs 5,940 crore, respectively at the end of September 2024.
Recently, UPMA organised a national-level microfinance summit in Lucknow to mark its 7th annual convention. It saw the participation of leading bankers and MFIs, including State Bank of India (SBI) ex-chairman Dinesh Kumar Khara.
UPMA also released a report on the potential of the MFIs in bolstering UP’s march to become a trillion-dollar economy as envisaged by Chief Minister Yogi Adityanath.
Meanwhile, UP's minister of state for social welfare Asim Arun said microfinance played a vital role in supporting the micro and small industrial units and creating local job opportunities.
Utkarsh Bank managing director Govind Singh said MFIs provided an impetus to employment generation and supported the weaker sections of society with a credit window to become self-reliant.
Union financial services secretary M Nagaraju recently advised MFIs to refrain from 'reckless' lending, while underlining that MFIs played a crucial role in fostering financial inclusion.
“Any reckless or poor underwriting norms regarding lending to SHGs or Joint Liability Groups (JLGs) will only harm the sector,” he remarked.
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