Microfinance loan book grows 10% sequentially to Rs 2.53 trillion in Q4

 Banks continue to dominate the market share of 42 per cent.

Micro-finance loans in India rose by 10 per cent sequentially to Rs 2.53 trillion in January-March 2021 (Q4FY21) from to Rs 2.31 trillion in the quarter ended December 2020.

However, the stress on repayments profile only moved up in Q4 over Q3, showing an adverse economic downturn on the income of those at the bottom of the pyramid.

According to the credit information bureau, CRIF data loans with 90-plus day dues rose from 3.8 per cent in December 2020 to 4.4 per cent in March 2021.

The expansion in microfinance book in Q4FY21 came on the back of marginal growth of 1.5 per cent in Q3 and de-growth in Q1 and Q2, FY21. Banks continue to dominate the market share of 42 per cent.

Referring to the 180-plus day dues bucket, the credit information bureau said they increased sharply from 0.8 per cent in March 2020 to 3.4 per cent in December 2020 and further to 4.4 per cent on March 21, with Assam contributing most of the flows. There has been a lot of stress in Assam due to socio-political factors affecting the region in Q3 FY20, and the recent Microfinance Bill 2020 impacting largely NBFC MFIs, it added.
The Reserve Bank of India has mooted streamlining regulations by replacing the current framework of institution-based regulation with activity-based regulation. This would augur well for microfinance lenders, bringing them on a level-playing field, enhancing the delivery of last-mile credit, and strengthening consumer protection, it added.