Microfinance sector's loan portfolio shrinks in Q2, FY21

Microfinance sector's loan portfolio shrinks in Q2, FY21

However, the GLP rose by 14 per cent on a year-on-year basis.

IANSUpdated: Thursday, January 07, 2021, 09:28 PM IST
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An Indian man displays new 2000 rupee notes outside the Reserve Bank of India (RBI) in Mumbai on November 10, 2016. Long queues formed outside banks in India as they reopened for the first time since the government's shock decision to withdraw the two largest denomination notes from circulation. / AFP PHOTO / PUNIT PARANJPE |

The gross loan portfolio (GLP) of India's microfinance sector witnessed a de-growth of 1.15 per cent in the July-September quarter at Rs 2.24 lakh crore, on a quarter-on-quarter basis, according to CRIF High Mark's 'MicroLend' report.

However, the GLP rose by 14 per cent on a year-on-year basis.

"The live customer base shrunk by 7 per cent in Q2 as of Jun 2020 to nearly 5.7 crores. The active loan base also shrunk by nearly 1.5 per cent to 10.5 crore active loans," it said.

The originations are down by 50 per cent, both in value and volume terms as compared to Q2 of last year. Coming into Q2 FY 2020-21, the average ticket size of microfinance loans stood at Rs 34,700.

As of September 2020, early repayment stress spiked to 15.7 per cent as borrowers struggled to repay loans, once the moratorium was lifted.

During the second quarter of the FY 2020-21, disbursements regained pace, as lending operations resumed in the new normal, witnessing an increase of 380 per cent, reaching Rs 29,700 crore, still one-half of the amount in the same quarter previous year.

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