Micro loans grow in December after two quarters of contraction

11 Mar , 2021 By : kanchan Joshi

MUMBAI: India’s microfinance sector grew 1.18% sequentially in the December quarter to Rs2.26 trillion, credit bureau Crif High Mark said in a report on Thursday.

The data was released as part of its Microlend Report, a quarterly update on the micro-finance lending landscape in India. According to the report, the average ticket size of micro-finance loans stood at Rs34,900 in the December quarter. It said with a nearly 80% increase over the previous quarter, disbursements by value stood at Rs56,090 crore but was 11.5% lower on year.

Banks remain the largest lender of micro loans, at 41.8% of the gross loan portfolio of the industry, followed by non-banks microfinance institutions (MFIs) at 31.8% and small finance banks (SFBs) at 16.9% as of December, the data showed.

“In terms of volume, disbursements in Q3 FY21 almost doubled, compared to the previous quarter standing at 17.5 million and only 4% lower than same quarter previous year," Crif High Mark said in a statement.

“The microfinance sector in India has traversed a turbulent journey in this financial year. After witnessing degrowth in the gross loan portfolio in the consecutive first two quarters, the sector experienced green shoots of recovery in the third quarter, with a growth in gross loan portfolio (GLP), albeit at only 1.18% over the previous quarter," it said.

According to Crif High Mark, as markets opened up and operations resumed in the second quarter of FY21, disbursements have picked up pace. Digitalisation, it said, has gained recognition with more lenders in the customer onboarding stage.