According to Sa Dhan’s Bharat microfinance report 2020, the microfinance industry saw a 31% rise in its loan portfolio in the 2019-20 financial year. As on March 31 2020 the loan portfolio stood at Rs 2,36,427 crore through1,085 lakhs active loans. As per the report, the industry expects a moderate growth at 15% in the current financial year.
The industry registered a 31% year-on-year growth in FY 2019-20 despite the outbreak of pandemic in the last quarter, which is considerably lower when compared to a 41% growth rate in FY 2018-19. The report said that natural calamities in states like Odisha, Kerala, and West Bengal and the actions by vested interest political parties in some districts of Assam and Karnataka disrupted the growth rate during FY 2019-20. From the total loan portfolio, 32% was contributed by NBFC-MFIs. The year-on-year growth of its portfolio is at 38%. NBFCs have loan accounts by 26% and average ticket size by 9%. Banks and small finance banks together account for 56% of the total portfolio. On a year-on-year basis, banks recorded a 24% growth in their loan portfolio, and SFBs recorded a 34% growth. The year 2019-20 saw a sharp rise in rural customers because some large MFIs which reported zero growth in the year increased their rural customer share above 90%. The year also marked a 3% decrease in loan disbursements. The report said due to COVID -19 microfinance operations halted entirely during the last 15 days of March 2020.
Sa-Dhan Executive Director P Satish said the onset of the pandemic in the last quarter had deterred the projected growth for the year 2019-20. Moderate growth is expected in the current financial year due to weakened activity in the first two quarters. He added that the mid- and small-scale MFIs are badly affected by liquidity squeeze and high cost of funds. While releasing the report, NABARD Chairman G R Chintala said that against all odds, the microfinance sector is working with resilience to bring in the financially underserved in the scope of financial inclusion. He also addressed the need to increase financial expenses to create a sustainable business model for micropreneurs.
Microfinance institutions borrow from banks and lend to their customers at a margin. Microfinance customers are also being served by banks, SFGs, and NBFCs. Sa-Dhan is a leading association of community development finance institutions in India. The data collected from 252 lenders, including MFIs, not-for-profit microfinance institutions, banks, NBFCs, and SFBs, formed the basis for the ‘Bharat Microfinance Report 2020’ report.
