Microfinance AUM up 22% in FY23, MFIs top lenders with 40% share

The total loan portfolio of the microfinance industry increased by 22 percent in FY23 to INR 3.5 crore, serving 6.6 crore unique borrowers. The number of active microfinance loan accounts increased by 14.6 per cent to Rs 13 crore as in March 2023, according to data released by MFIN (Microfinance Institutions Network).

MFIs-NBFC continued to be the largest provider of microcredit in terms of loans outstanding, increasing its share of the total industry portfolio to 40 percent from 35.2 percent in FY22.

Banks ranked second with a market share of 34 percent, followed by small finance banks with 16.6 percent. Other microfinance companies accounted for 8.5 percent and other microfinance institutions 1.0 percent.

In terms of regional distribution, East, Northeast and South India accounted for 63 percent of the total portfolio. Bihar has replaced Tamil Nadu as the largest state in terms of list portfolio, followed by Uttar Pradesh in the third position.

“The share of East and North East decreased continuously during FY23, to 34.9 percent from 37.7 percent as of March 2022. South and North gained more than 1 percent each,” said Devesh Sachdev, President, MFIN.

He added that new loans disbursed after Covid fared much better which led to a sharp drop in the 1 to 60 day range of PAR (portfolio at risk) to 1.6 per cent from 4.3 per cent a year ago.

NBFC- Microfinance Institutions

The assets under management of NBFC’s MFIs increased by 39 per cent year-on-year to reach Rs. 1.3 crore in March 2023, including owned portfolio of Rs. 1.1 crore and managed or off-balance sheet portfolio of Rs. 23,931 crore.

Lenders disbursed loans of Rs. 1.3 crore during FY23 through accounts of Rs. 3.1 crores, compared to a disbursement of Rs. 81,936 crore in FY22 through Rs.2.2 crores. Average ticket volume increased by 13 per cent year-on-year to INR 42,010 in FY23.

NBFC’s MFIs, on a gross basis, have a network of 18,739 branches with 1.6 employees in March 2023. They received debt financing of INR 74,787 crore during the year – 59.2 per cent higher than FY22. Total equity grew by 25.4 per cent to INR 26,332 crore.