The microfinance sector is slowly approaching pre-Covid levels, both in terms of disbursements and portfolio quality. Disbursements in the third quarter of FY21 were about 96 percent of the same period last year.

In the 36th issue of the Micrometer, MFIN (Microfinance Institutions Network) said disbursements are expected to reach normal levels by the end of the fourth quarter of FY21 due to increased demand for loans.

The gross loan portfolio (GLP) of the microfinance industry stood at 2,326,448 yen as of December 31, 2020, an increase of approximately 10% from 2,11,302 crore yen as of December 31, 2019.

Sequentially, loan disbursements in the October to December 2020 quarter jumped more than 90% to 59,507 crore, from 31,261 crore in the second quarter of FY21. also doubled to 1.79 crore (0.88 crore) which signifies a steady progression towards normality.

NBFC-MFIs’ GLP rose almost 11% to 74,712 crore as of December 31, 2020, from ₹ 67,255 crore in the same period last year. Sequentially, it is up five percent, from 71,147 crore as of September 30, 2020.

“It is encouraging to see that the green shoots seen at the end of the second quarter have turned out to be true and that sector disbursements are almost reaching pre-Covid levels, supported by increased demand for loans to restart livelihoods. Disbursements in the third quarter of FY21 represent approximately 96% of the third quarter of FY20, indicating that they are expected to reach normal levels by the end of the fourth quarter of FY21, ”said MFIN CEO and Director Alok Misra said in a press release.

Collection efficiency

There was also an improvement in liquidity and the industry received financial support, both in the form of debt and equity.

NBFC-MFIs received a total of cro 10,876 crore in debt financing, more than 10% more than ₹ 9,854 crore in the second quarter of FY21.

NBFC-MFIs’ total equity increased by almost 17% to reach 18,077 crore as of December 31, 2020, compared to ₹ 15,508 crore in the same period last year.

“Lenders and investors continue to show complete confidence in the sector, as evidenced by debt financing up 10.4% from the previous quarter and equity up 16.6% from the previous quarter. compared to the corresponding quarter of last year, ”Misra said.

Despite the geographic variations, the quality of the portfolio evolves within a range of around 88 to 92%.

The microfinance industry serves around 5.83 crore of single borrowers with loan accounts of 10.50 crore.

The average loan disbursement per account for the third quarter of FY21 was 34,070, almost 19% more than 28,620,620 in the same period last year.

Banks hold the largest share of the micro-credit portfolio, with a total outstanding loan of 97,956 crore, representing about 42% of total advances. NBFC-MFIs account for around 31% at 72,128 crore yen, small funding banks hold around 17% at 39,062 crore yen, NBFCs account for an additional 9% and other MFIs account for around 1% of the total loan portfolio .

In terms of regional distribution of BPLs, the east and north-east account for 41 percent of the total NBFC-IMF portfolio; south 27 percent, west 14 percent, north 11 percent; and central eight percent.