Bhopal: Rs 14,000 crore portfolio, yet stunted growth

Bhopal (Madhya Pradesh): The microfinance sector in Madhya Pradesh is struggling to recover from the blow it received during the corona pandemic, said industry players on Sunday. With a portfolio of about Rs 14,000 crore, the growing microfinance industry is searching for governmentís aid to recover, they said.

Kartik Mehta, co-founder and managing director of Pahal Financial Services, said, The industry has witnessed a slowdown due to nationwide lockdown from March 2020. Loan sourcing has contracted by 28% and 24% in terms of volume and value respectively from October 2018 to September 2019.

'We are, however, in expansion mode as for the first time since 2020, the disbursements were higher than pre-Covid level by February. But we have a long way to go,' he added.

Nevertheless, the portfolio in the current quarter has declined as compared to the portfolio during June 2021 when the lockdown was relaxed.

As per Small Industries Development Bank of Indiaís (SIDBI) data, the quarter-to-quarter growth in December 2020 after September 2020 was 4%, which shot up in March 2021 with a growth of 11%.

But the growth percentage declined again in June 2021 to as low as minus 12%. There was another lockdown in state from April 2021 to June 2021. The growth rate can reach 6% only by next December.

Portfolio outstanding of Madhya Pradesh as on September 30, 2021, was Rs 13,920 crore and loans worth Rs 4,340 crore were disbursed during January-September 2021. The top 10 states including MP have contributed to 90% of total portfolio outstanding, the SIDBI data stated.

Overall, the microfinance industry has grown, but it still needs a dedicated focus of central government and all its stakeholders to grow exponentially. ìWe need a framework of guidelines and move towards agriculture and allied services,î said PK Biswas, an independent board member of Samhita Microfinance.

Pramod Sharma, the assistant director at Madhya Pradesh Directorate of Institutional Finance, said, Reserve Bank of India has released guidelines making urban and rural microfinance institutions equal in terms of household limit of loans. But it is obviously not enough to stabilise micro finance institutions. There is a need for an extended regulation to curb losses and the union government and RBI are working on it.