Microfinance Industry witnessed 53% YoY growth in Q3 FY17: MFIN Report

Keyhighlights of Q3 FY17: 
• MFIs provided microcredit to over 3.38 crore clients, an increase of 42% over Q3 FY 15-16
• Aggregate Gross Loan Portfolio (GLP) of MFIs stood at Rs 56,634 crore • Portfolio at Risk (PAR) > 30 days witnessed an increase from under 1% to 7.52% in Q3 FY 16-17 as compared to previous quarters
• The composition of Membership of NBFC-MFIs is 11 small (GLP <Rs. 100 Cr), 19 medium (GLP between Rs. 100-500 Cr) and 21 large (GLP >Rs. 500 Cr)
• In terms of regional distribution (GLP), South is at 33%, East at 16%, North at 27% and West at 24%

Chandigarh, 16 February 2017: According to the recently released report by Microfinance Institutions Network, a Self-Regulatory Organisation (SRO) and a premiere industry association, the microfinance industry has grown by 53% year on year for the relevant period. The aggregate GLP of microfinance institutions stood at Rs 56,634 crore in Q3 FY17 as compared to Rs 36,912 crore in Q3 FY15-16.

Microfinance Industry witnessed 53% YoY growth in Q3 FY17: MFIN Report

According to the report, there was a decline of 26% in the number of loans disbursed and a 16% decrease in loan amounts disbursed as compared to the corresponding quarter of the last year. The decrease on both disbursement and collection is due to the impact on industry post discontinuance of the High Value Currency Notes (HCVNs) of Rs. 500 and Rs.1000. The pulling out of the HCVNs from circulation significantly impacted the microfinance sector which is 99% cash driven. Speaking on the effects of demonetization on the industry,Ms Ratna Vishwanathan, CEO, MFINsaid, “Post the discontinuation of HCVNs with effect from midnight of 8th November, the industry was thrown out of gear initially. This was to be expected in a sector which is 99% cash intensive and has a unique doorstep delivery model specifically for the unbanked and underbanked. During the whole two months post discontinuing of High Value Currency Notes, MFIN has had to engage with State Governments at both the ministerial level as well as the bureaucracy, the RBI and extensively with the press to quell the surge of disinformation with reference to microfinance practices. The irony is, however, that over the last 4-5 years, 45 million women have been brought into the framework of a regulated platform from which to access credit. But the fragility of the process is evident in the fact of how quickly misinformation can lead to disrupting their credit histories making them once again vulnerable to the grey market as their primary source of credit. This illustrates the need for further educating clients on how best to take care of their own interests so as not to become victim to misinformation. Going forward, this experience can only lead to further strengthening the sector and making it more resilient in the face of any exigency that may come forth.”

Over half of the total disbursements(which accounts for 56%) during the quarter came from 5 states, namely - Karnataka, Tamil Nadu, Maharashtra, Odisha and Bihar. The loan amount disbursed was INR 14,707cr in Q3 FY15-16, and is at INR12,424cr in Q3FY 16-17. The employee base of NBFC-MFIs has also grown significantlyfrom 68161 to 102,716, showing an increase of 51% from last year.

GLP distribution is highest in South Indiaat33%, followed by North Indiacontributing to 27%, West India at 24% and East Indiaat 16%. The industry has witnessed a42% growth in the client base from last year,during whichMFIs provided microcredit to 3.38 crore borrowers as compared to 2.37 crore toborrowers in Q3 FY 15-16.

About Microfinance Institutions Network 

Microfinance Institutions Network (MFIN) is the premier industry association and Self-Regulatory Organisation (SRO) for the microfinance industry in India and its current membership/associates consists of 52 leading NBFC (Non-banking Financial Company) Microfinance Institutions (MFIs) in the country. The aggregate business of MFIN members constitutes over 90 per cent of the Indian NBFC-MFI industry (excluding SHGs). MFIN seeks to work closely with regulators and other key stakeholders to achieve larger financial inclusions goals through microfinance.