The market share of banks in the microfinance segment declined further to nearly 32% in April-June, from 38.4% a year ago, as non-bank lenders witnessed a sharp rise in disbursements, a report from Sa-Dhan said on Monday.
The market share of banks in this segment stood at 34.1% in the March quarter. This data come at a time when various banks have been looking to enter the microfinance segment in a bid to increase margins.
The market share of non-profit institutions fell to 0.3% in the June quarter, from 0.9% a year ago. Small finance banks, and non-bank lenders constitute nearly 26.5% of the market share in the microfinance segment in the June quarter.
“Although the first quarter is usually a dull one for the industry, microfinance continued to perform well, indicating that the overall outlook for the year is very positive,” says Jiji Mammen, executive director and CEO, Sa-Dhan.
“Disbursements have recorded more than Rs 76,000 crore in the first quarter, which is 30% more than the disbursements done in the same period of last FY,” he added.
The loan portfolio of NBFC-MFIs rose 43% year-on-year (y-o-y) to Rs 1.5 trillion as on June 30. The loan portfolio of banks rose a mere 0.9% y-o-y to Rs 1.1 trillion as on June 30.
But, the loan portfolio of non-for-profit institutions fell 64% year-on-year to Rs 983 crore as a major not-for-profit lender Cashpor Micro Credit moved to the NBFC-MFIs category in accordance with the latest regulatory framework for microfinance loans.
Overall disbursements of the microfinance industry rose 30% y-o-y to Rs 76,274 crore in the quarter under review. Specifically, disbursements of NBFC-MFIs rose 48% y-o-y to Rs 32,356 in April-June.
The portfolio quality, as measured by portfolio at risk, indicates that it has improved under all buckets compared to the corresponding quarter of the previous financial year. Portfolio at risk for loans overdue by more than 30 days improved to 1.97% as on June 30 from 5% a year ago.
Portfolio at risk for loans overdue by more than 60 days improved to 1.45% as on June 30, from 3.56% a year ago. Portfolio at risk for loans overdue by more than 90 days improved to 0.92% as on June 30 from 1.85% a year ago.
“The share of portfolio indicates that NBFC-MFIs have become more proactive in their approach, taking the benefit of the new regulatory framework of the RBI and the positive mood in the country towards MFIs,” Mammen said, adding that there are some local issues still cropping up in different geographies, including an organised move by some to mislead the vulnerable people.