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Despite an improvement in overall repayment collection, almost 12% of all microfinance loans totaling Rs 2.76 lakh crore were still non-performing assets (NPA) at the end of June, according to the microfinance industry association Sa-Dhan.
Several important states, including Assam, West Bengal, Kerala, Tripura, and Chhattisgarh, have shown below-average recovery and have a negative impact on the asset quality overall.
Microfinance is basically a banking service provided to not employed or low-income individuals or groups who otherwise would have no other access to financial services.
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“Recovery has increased from the previous quarter and in certain states has reached almost 99%. There are still certain regions, nevertheless, where collecting is below average. For instance, Assam’s collection efficiency is between 50 and 55 percent “In its quarterly report, Sa-Dhan stated.
The industry had increased by 24% year over year
By the end of June 2022, the sector’s NPA was around 12% overall, but NBFC-MFIs as a whole had 9% of their portfolio, or Rs 9,7849 crore, in non-performing assets.
At the end of June, the industry had increased by 24% year over year to Rs 2.76 lakh crore from Rs 2.22 lakh crore.
“The industry is back on track after overcoming pandemic-related challenges. It has achieved a strong rise despite being busy throughout Q1 implementing the new RBI regulations, according to Sa-Dhan executive director Jiji Mammen.
Smaller MFIs still have trouble getting bank loans
“Even though the sector’s funding flow has improved, several smaller MFIs still have trouble getting bank loans. We are attempting to close this gap, he remarked.
Except for banks, every lender’s portfolio experienced double-digit growth. The loan outstanding for non-bank lenders has increased by 55%, followed by increases of 35%, 28%, and 21% for NBFC-MFIs, small finance banks, and not-for-profit MFIs.
Detailed report of Q-MF-Report_Q3_FY-21-22 can be accessed here:
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