Microlenders’ books up 24.5%, asset quality improves

The bad loan ratio was highest at 10.6% as of December 31, 2022, on account of the Covid-19 pandemic-induced default. Industry leaders said that the has reduced over time with the lenders writing off bad loans from their portfolio as balance sheet exercise. They said that write-offs of bad loans are technical in nature and they would continue with their recovery attempts.

The microfinance industry served 78 million unique borrowers, through 149 million loan accounts, which increased by 15.4% over the past 12 months.

In terms of , the East, Northeast and South account for 62% of the total portfolio with Bihar remaining the largest state in terms of portfolio outstanding followed by Tamil Nadu and .

NBFC-MFIs as a group remained the largest provider of micro-credit accounting for 39.4% of the total industry portfolio, followed by banks with 33.2% share, small finance banks with 17.1% share, non-banking finance companies with 9.3% share and other micro lenders accounting for the balance 0.9% of the universe.

Banks which reported sluggish growth of 4.5% in portfolios last year have reported a much healthier growth of 20.9% this year. NBFC-MFIs on the other hand reported a relatively lower growth of 23.6% in their cumulative portfolio this year as compared to 37.7% last year, MFIN chief executive Alok Misra said. "Another important development noticed in the last financial year is the considerable increase of 39% in equity of NBFC-MFIs. This will allow the entities to leverage and expand their operations in the coming years," Misra said.