Micro credit grows to ₹2.63 lakh cr, MFI loans up 19% in 2021-22

The combined micro credit portfolio of 272 lenders touched ₹2,63,760 crore in 2021-22, a 5% increase over the outstanding loans for the Indian microfinance sector the previous year, the Bharat Microfinance Report (BMR) of 2021-2022 published by Sa-Dhan, the association of microfinance firms said. The report collates data of 11 crore active loans from microfinance institutions (MFIs), non-banking financial companies (NBFCs) , banks, small finance banks (SFBs), non-profit MFIs and NBFC-MFIs. However, the quantum of credit extended to the poor households by MFIs registered a year-on-year growth of 19% to touch ₹1,35,099 crore during the same period.

The average ticket size per loan stood at ₹39,903 as on March 2022 whereas it was ₹36,510 as on March 2021. The average ticket size across all categories has increased except for non-profit MFIs.

"The microfinance industry has come out successfully from the lull it had faced on account of pandemic in the previous two years. Above that, the Reserve Bank of India's framework for industry has ushered in a new era. The new guidelines have been implemented and we expect the industry to have a steady growth. From growth perspective, we saw a growth of 5% in the last fiscal and greater push in the current FY. If we continue with the positive growth, the industry might touch ₹3,25,000 crore in the current fiscal, if not more," Jiji Mammen, executive director and CEO of Sa-Dhan, says.

According to BMR 2022, the Return on Asset (RoA) and Return on Equity (RoE) remained positive. During FY 2021-2022, RoA was 1.11% (as against 0.64% the previous year) and RoE stood at 4.26% (2.83% in 2020-21) for the industry. The average financial cost stood at 10.65%. The percentage of non-performing assets (NPAs) rose to 2.05 in 2021-22 as against 1.85 in 2020-21.

The report points out that the top 10 states, led by Tamil Nadu and Bihar, constitute nearly 80% of the total portfolio. It also shows that the top 25 districts contributed 20% of the portfolio and top 10 major MFIs represented 60% of the business. There were also about 100 districts with less than 10% penetration and 229 with 10 to 25% penetration. "Of the 213 MFIs reported, 99 of them are confined to one district and 12 covers more than 15 districts. The recovery performance continued to be a matter of concern in Assam and some other States in the Eastern region, recording two three times higher NPA than national average," the report points out.