Microfinance Loan Disbursals Drop 41.7% To 1.19 Crore In December Quarter, Says Crif Report

The number of microfinance loans disbursed by lenders declined by 41.7% to 1.19 crore in the December quarter, according to a report by credit information company Crif High Mark.

The total amount disbursed to borrowers from poor and marginalised communities decreased by 34.9% to Rs 63,440 crore, compared to Rs 97,400 crore during the same period last year.

Loans overdue for 31 to 180 days surged to 6.4% of the portfolio by the end of December 2024, up from 2% a year earlier, the report noted.

The overall portfolio shrank by 4% year-on-year and 5.4% quarter-on-quarter, settling at Rs 3.91 lakh crore. This decline was attributed to industry adjustments, including stricter regulatory guidelines, risk realignment, and changes in underwriting and collection strategies.

The report highlighted the impact of recent measures, such as caps on the number of lenders per borrower, which significantly reduced exposure for borrowers with multiple lender associations. Borrowers with five or more lender associations experienced a sharp 36% drop in exposure on a year-on-year basis.

Additionally, the number of active loans fell to 14.6 crore in the December 2024 quarter from 15.7 crore a year earlier.

Kerala witnessed the steepest decline of 15.8% in the outstanding loans, followed by Rajasthan at an 11.6% fall, Odisha (9%) and Tamil Nadu (8.3%).

Uttar Pradesh showed the fastest growth among major states at 1.2% year-on-year, the report said, adding that the most populous state, along with Bihar and Tamil Nadu, accounts for 38% of the outstanding.

Indicating a potential market realignment, the report said non-banking financial companies emerged as the fastest-growing segment at 17.3% growth, courtesy of their focus towards over Rs 1 lakh loans, while all the others, including the largest segment of banks, showed a decline.

(With PTI Inputs)