Banks cede market share in microfinance loans to non-banking finance companies-microfinance institutions

Non-banking finance companies-microfinance establishments (NBFC-MFI) and small finance banks have gained market share in microfinance lending sector on the expense of banks as they outperformed the lenders when it comes to development in gross mortgage portfolio (GLP) on a year-on-year foundation within the fourth quarter of the monetary yr ended March 31.    

Though banks proceed to dominate the microfinance portfolio with over 37% market share, the NBFC-MFIs and SFBs posted double digit on yr development in GLP in Q4FY22 in comparison with a muted on yr development witnessed by banks, credit score data bureau CRIF mentioned in its quarterly Microlend report. On a sequential foundation nevertheless, banks posted 8.1% development in microfinance mortgage portfolio, marginally decrease than NBFC-MFI development of 8.2% however larger than 7.1% development posted by SFBs.

General, the gross mortgage portfolio of the microfinance sector grew by 10.2% in Q4FY22 to Rs 2.86 trillion. Regardless of enhance in GLP, mortgage originations declined by 13.9% on yr to Rs 77,400 crore in Q4FY22 and loans disbursed additionally fell by 17.2% on yr to 1.91 crore loans.

The variety of accounts that had been overdue for greater than 180 days elevated on a year-on-year foundation, as per knowledge compiled by CRIF exhibits. In Q4FY22, accounts that had been overdue for greater than 180 days (PAR 180+) jumped to eight.4% of the gross mortgage portfolio from 4.4% in the identical quarter final yr. The company compiled the info for high 30 MFI establishments with a market share of 88% as of Q4FY22. Nonetheless, there was an enchancment within the accounts that had been overdue for greater than 30 days and 90 days.

The highest 5 greatest performing lenders have mortgage overdue of greater than 30 days of 1.5% of their cumulative GLP, 0.8% of mortgage overdue for greater than 90 days and seven.4% of loans overdue for greater than 180 days.

When it comes to ticket dimension, the loans within the vary of Rs 30,000-50,000, which comprised the best share of the GLP, improved 42% on yr whereas loans with ticket dimension of Rs 50,000-75,000 grew by 14.4% on yr. The 2 ticket sizes include greater than 60% of the full GLP within the sector.

In geographical combine, high 10 states embrace Tamil Nadu, Bihar, West Bengal, Karnataka, Maharashtra, Uttar Pradesh, Rajasthan, Odisha, Madhya Pradesh and Kerala, which represent 83.4% of the GLP as of March 31. Of the full portfolio held by banks, 44.3% is concentrated in jap area. NBFC MFIs have 27.5% share every in east and south and SFBs have focus of 36.7% in south out of the full GLP.

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