Banks Grow Microcredit Faster in FY24, NBFC-MFIs Moderate

Chennai: The gross loan portfolio of the microfinance sector registered a better growth of 24.5 per cent in FY24. While the growth of NBFC-MFIs moderated, banks clocked double-digit growth against last year’s single-digit growth.

The overall microfinance industry at the end of FY24 had a total Gross Loan Portfolio (GLP) of Rs 4,33,697 crore, 24.5 per cent higher than Rs 3,48,339 crore clocked till Mar 31, 2023, according to MFIN. In FY23, the microloan portfolio had seen a growth of 22 per cent.

As many as 87 NBFC-MFIs had a loan outstanding of Rs 1,70,903 crore, accounting for 39.4 per cent of the total industry portfolio, while 14 banks held the second largest share of the portfolio in microcredit with total loan outstanding of Rs 1,44,022 crore, which is 33.2 per cent of total microcredit universe.

However, banks recorded a healthier growth of 20.9 per cent in FY24 against 4.5 per cent in FY23. In FY23, they had gone slow with microcredit as the sector had witnessed high levels of delinquencies as well as write-offs following the Covid-19 years.

On the other hand, NBFC-MFIs saw the growth moderating from 37.7 per cent in FY23 to 23.6 per cent in FY24. While banks seem to have revived their interest in microcredit, the high base of last year seems to have moderated the growth of NBFC-MFIs.

As far as delinquencies are concerned, Portfolio at Risk between 31 to 180 days came down for banks from 2.7 per cent at the end of FY23 to 2.2 per cent by FY24. For NBFC-MFIs, this went up from 1.5 per cent to 2 per cent.

In terms of regional distribution, East & Northeast and South account for 32.1 per cent and 30.6 per cent respectively of the total industry portfolio. Bihar remains the largest state in terms of portfolio outstanding followed by Tamil Nadu and Uttar Pradesh. Since June 2021, the share of the East and Northeast has come down from 40 per cent and that of the South has gone up from 25 per cent.