Research Notes - Microfinance
M
icrofinance industry in India grew
44% yoy by March 2019 against
a growth of 31% in the previous
year and the industry’s gross loan portfolio
(GLP) stood at 18850 billion, according to a study by credit information bureau CRIF Highmark, which has a specific focus on the microfinance sector. The study highlights that this growth has been significantly driven by addition of new borrowers with the sector having an outreach of 56 million active borrowers, which is a growth of 22% yoy by March 2019. CRIF Highmark says the average microfinance exposure per borrower has risen by 22% yoy to35,100 and the
number of active microfinance loans is 96
million, which is a 26% yoy growth with
nearly 1.7 active microfinance loans per
borrower by March 2019. The ticket size
also grew by 1 2.7% yoy to `31,100.
Another highlight brought out by
the study is that the East, including the
Northeast region, had a 26% yoy growth
in the borrower outreach, the West ~23%,
and South just 14% new borrowers. The
rural microfinance lending continues to
accelerate with a 50% growth in the book
size while the urban book grew just by 19%.
The rural portfolio is 54 % of the overall
gross loan portfolio.
The study finds that the Portfolio at
Risk (PAR) 1-30 days past due, which
CRIF Highmark says indicates the early
delinquency rates, has gone up a full
percentage point to 2.8% in March 2019
as compared to 1.8% in March 2018. The
risk level for PAR 31-180 has reduced from
1.5% in March 2018 to 1.0% in March 2019.
A similar trend has been observed in case
of PAR 180+ level, which has improved
substantially on a from 6.4% to 4.6%, while
the incremental write-offs have reduced
through the last fiscal year.
The study says NBFC-MFIs have the
largest market share of microfinance loans
at 36%, closely followed by banks at 33%,
small finance banks at 19% and others 12%.
It points out that the market share of small
finance banks continues to decrease. Urban
geographies constitute 58% of small finance
banks’ portfolio, while that of banks, NBFC-
MFIs and others ranges between 41%-47%
as of December 2018.
The study finds that top 10 states
account for 84% of the GLP. “Overall,
eastern region dominates the market share
with 40% of the total GLP share, followed
by southern region (27%), western region
(14%). Central & north eastern region have
a ~8% of the national GLP. The portfolio yoy
growth is high in North East (62%) & East
(46%) while growth in South (40%), West
(43%) and Central regions (38%) is belowthe national portfolio growth (45%),” it says.
The study also adds that West Bengal
has marginally surpassed Tamil Nadu as
the largest market with ~15% share of the
national GLP. Assam (62%), Bihar (59%),
West Bengal (47%) and Tamil Nadu (47%)
have the highest yoy growth in the book
size. Bihar now has a larger book size than
Karnataka and Assam and leads Orissa in
terms of the book size. The growth in Bihar
and Assam is driven by growth in rural
lending upwards of 60% yoy while West
Bengal has a 48% growth in the rural book
size as compared to Tamil Nadu which has
a 46% growth in the rural book size.
Another aspect brought out by the study
is that Tamil Nadu has 41% of the portfolio
in the 25K-30K range, whereas West Bengal
and Assam have only 17% of the portfolio
in this ticket size segment. West Bengal &
Assam continues to have around 41% of
its portfolio in the 60K+ ticket segment
while the rest of the states show a decent
distribution of the portfolio across ticket size
segments, with around 1/3rd of the national
portfolio in the 25K-30K range. Nearly
6.58% borrowers from Tamil Nadu have
loans running with 4 or more lenders and
this number has sharply risen from 1.46%
in March 2018. The gross loan portfolio for
Tamil Nadu has grown by 47% yoy.
[email protected]Microfinance industry records substantial growth