Microfinance loans grow 21.3% YoY to US$ 42.36 billion (Rs. 3.5 trillion) in FY23, says report

Microfinance loans in India increased 21.3% year-on-year (YoY) at US$ 42.36 billion (Rs. 3.5 trillion) in FY23, backed by revised regulatory norms and higher demand.

Asset quality profile improved with loans due in more than 90 days dipping to 1.06% in March from 2.43% a year ago, according to industry group Sa-Dhan.

Numbers suggest that the microfinance industry has come out of the impact of Covid-19 and is on a growth path, said Mr. Jiji Mammen, Executive Director and Chief Executive Officer at Sa-Dhan.

New regulatory norms have created a level-playing field and it is reflected in the growth of the portfolio of non-banking finance companies and NBFC (Non-Banking Financial Companies) working as micro finance institutions (NBFC-MFIs).

The NBFC MFI group posted 37% YoY growth in portfolio at US$ 16.83 billion (Rs. 1.39 trillion). Small finance banks posted a 19.03% growth at US$ 7.07 billion (Rs. 58,431 crore) of lending book. The NBFC group recorded 49% YoY growth at US$ 3.6 billion (Rs. 29,664 crore) at the end of March 2023. Banks recorded paltry 3.22% growth in portfolio at US$ 14.5 billion (Rs. 1.2 trillion).

The microfinance industry’s number of loan accounts increased 10% YoY to 13.6 million in FY23, from 12.39 million in FY22. Lender wise figures show NBFCs registered the highest y-o-y growth (23%), followed by NBFC-MFIs (15%), banks (6%), and SFBs (5%) respectively, Sa-dhan said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.