Bumps on MFI road: Microfinance biz turns cautious as delinquencies rise

Business correspondents have helped deepen banking penetration in the nearly two decades they have been around. Can they play a role on the field for MFIs?

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 per cent. A closer look at the numbers also shows a rise in delinquencies across all time-bands (or days-past-due as it is called in the trade). Microfinance institutions (MFIs) are applying the brakes. 

 

How did we get here? Is it rampant over-leveraging — of the kind seen in retail lending?

 

“It’s not so. As per bureau data only