MFI loans down 41.7% to 11.9 million in Dec quarter, NPAs zoom: Report

The number of microfinance (MFI) loans disbursed by lenders declined 41.7 per cent to 11.9 million in the December quarter, according to a report by credit information company Crif High Mark.

The amount disbursed to the borrowers who come from the poor and marginalized communities declined 34.9 per cent to Rs 63,440 crore as against Rs 97,400 crore in the year-ago period.

Loans unpaid for 31 to 180 days jumped to 6.4 per cent of the portfolio at the end of December 2024, from the 2 per cent level in the year-ago period, the Crif report said.

The overall portfolio declined by 4 per cent on-year and by 5.4 per cent on- quarter to Rs 3.91 trillion, the report said, attributing it to industry calibrations, including regulatory guidelines, risk realignmentand changes in underwriting and collection strategies.

 

Crif said the ongoing shifts on the metrics may have its origins in the moves undertaken by the industry lately.

"Stricter regulatory guidelines, such as caps on the number of lenders per borrower, have significantly reduced portfolio exposure for borrowers with multiple lender associations," it said.

Borrowers with five or more lender associations experienced a sharp 36 per cent drop on-year in exposure, it said.

The number of active loans dropped to 14.6 crore in December 2024 quarter from 15.7 crore a year ago.

Kerala witnessed the steepest decline of 15.8 per cent in the outstanding loans, followed by Rajasthan at 11.6 per cent fall, Odisha (9 per cent) and Tamil Nadu (8.3 per cent).

Uttar Pradesh showed the fastest growth among major states at 1.2 per cent on-year, the report said, adding that the most populous state along with Bihar and Tamil Nadu accounts for 38 per cent of the outstanding.

Indicating a potential market realignment, the report said non-banking financial companies emerged as the fastest-growing segment at 17.3 per cent growth courtesy their focus towards over Rs 1 lakh loan, while all the others including the largest segment of banks showed a decline.