Microfinance industry’s loan portfolio grows by 21% to touch ₹3.93 lakh crore

Posted on by

The microfinance industry’s loan portfolio grew robustly 21 per cent as December 2023 to touch ₹3.93 lakh crore, according to latest data compiled by Sa-Dhan .

According to this RBI-approved Self Regulatory Organisation (SRO), Microfinance Institutions (MFIs) continued to occupy the largest share in the pie, with 40 per cent, followed by banks at 32 per cent, and SFBs at 18 per cent, NBFCs at 11 percent, and Non-Profit MFIs at 0.18 percent.

“Microfinance sector is on a boom with overall improved performance in every parameter. This growth story has been continuing for last 2 quarters and expected to continue a few more years”, Jiji Mammen, ED & CEO, Sa Dhan said.

He also said that microfinance needs to be expanded to other geographies, which are not fully served at present. 

Sa-Dhan has taken the lead in identifying the issues pertaining to the unreached geographies by launching a study with the support of SIDBI. The study report is expected soon and will be made available to the public.

Another challenge is the need to create awareness among the micro borrowers. Sa-Dhan, with the support of DEA Fund of RBI ,conducted 2,250 workshops across the country in 19 states covering 1.42 lakh persons and imparting such training.

 Sa-Dhan is also working to promote micro-enterprises among SHGs and JLG members. A project is being implemented to develop one million enterprises in the country, Mammen added.

As of December 2023, the number of loans accounts serviced by all micro lenders stands at 14 crore accounts, up 9 percent year-on-year.

For the third quarter that ended December 31, 2023, the total disbursement of all micro-lenders grew 19 per cent at ₹ 96,754 crore.

The top five states in terms of portfolio are Bihar (₹58,706 crore), Tamil Nadu (₹53,304 crore), Uttar Pradesh (₹40,770 crore), Karnataka (₹37,427 crore), and West Bengal (₹35,431 crore). These top five states account for about 57 percent of the industry’s total portfolio.

Among the major states in terms of portfolio (Y-o-Y growth), Uttar Pradesh has recorded 38 per cent growth, followed by Bihar at 35 per cent, Karnataka at 30 per cent, Tamil Nadu at 25 per cent, and Odisha at 24 per cent, respectively above the industry average of 21 per cent, while West Bengal has registered modest growth of 8 per cent.

The number of districts having portfolio greater than ₹2,000 crore has significantly increased from 14 districts on Dec 20 22 to 30 districts as of Dec 20 23. The majority of these districts are in Bihar (12 districts), West Bengal (6 districts), Tamil Nadu (5 districts), and Karnataka (4 districts) etc.