NBFC-MFIs Debt Funding Drops 40.6 Percent in Q2 FY25
By : DC Correspondent
Update: 2024-12-09 14:49 GMT
Chennai: As NBFC-MFIs turned cautious of asset quality, micro loan disbursements declined 16 per cent in terms of value and 27 per cent in volume terms in Q2 FY25. However, the industry expects asset quality to improve in the next few months.
Loan amount of Rs 24,807 crore was disbursed in Q2 FY 24-25 through 50.4 lakh accounts. In the same quarter of last year, NBFC-MFIs had disbursed Rs 29,670 crore through 69 lakh accounts.
Against the Q4 FY24, when Rs 40,440 crore was disbursed through 88 lakh accounts, Q2 disbursements were down by 39 per cent. The disbursements have been coming down in Q1 as well. As a result, assets under management of NBFC-MFIs were down sequentially from Rs 1.45 lakh crore in Q1 to Rs 1.40 lakh crore in Q2 – down by 3.3 per cent. However, AUM was up 11.9 per cent compared to Q2 FY24, finds Microfinance Industry Network (MFIN).
The asset quality of the micro loans has been deteriorating since the end of the last fiscal. Portfolio at Risk (PAR) past 30 days as on 30 September 2024 has deteriorated to 6.2 per cent compared to 3.1 per cent as on 30 September 2023. PAR-60 has gone up to 4.9 per cent and PAR-90 to 3.8 per cent.
Due to lesser disbursements, NBFC-MFIs also raised lower funds in Q2. During Q2 FY25, NBFC-MFIs received a total of Rs 13,508 crore in debt funding, a 40.6 per cent decline from Q2 FY 23-24.
“Considering the ongoing challenges, the industry decided to moderate the disbursement growth, focus on strengthening underwriting as per MFIN guardrails and repayment collections. The credit quality is expected to stabilise in next few months post stronger underwriting, bumper kharif crop and ongoing strong trends in Rabi sowing,” said Alok Misra, CEO and Director, MFIN.