Microfinance Sector Sees Robust Growth with Rs 4 Trillion Portfolio Outstanding

The microfinance sector in India has experienced substantial growth, with the portfolio outstanding surging by nearly 31% year-on-year (y-o-y) to reach Rs 4 trillion as of December 31, according to the latest CRIF MicroLend report. The report also highlights a notable increase of 6% quarter-on-quarter (q-o-q) in the gross loan portfolio.

The number of active loans saw a significant rise of 23.2% y-o-y, totaling 155 million. Loan disbursements in the December quarter climbed by 27.1% y-o-y to Rs 89,043 crore, with microfinance entities disbursing 18.7 million loans during the same period, marking a nearly 10% increase compared to the previous year.

Moreover, the average ticket size of loans increased by nearly 16% y-o-y, reaching Rs 47,700 in the December quarter.

The portfolio quality remained stable, with the portfolio at risk for more than 30 days past due standing at 2.0%, and at 0.9% for more than 90 days past due as of December 31.

Bihar emerged as the top state by gross loan portfolio, contributing significantly to the sector’s growth. The top 10 states collectively accounted for 83% of the national gross loan portfolio.

An analysis of the loan composition reveals that approximately 52% of the portfolio of NBFC MFIs comprised loans with ticket sizes ranging from Rs 30,000 to Rs 50,000.

In terms of market share, non-banking financial companies lead the microfinance institutions market with a portfolio share of 38.3%, followed by banks at 33.4%, small finance banks at 17.4%, and diversified non-banking financial companies at 9.4% as of December 31.

This robust growth underscores the increasing importance of microfinance in providing financial access and support to underserved communities across the country.