Microfinance asset quality improves further as loans at risk fall to 2.3% in June: CRIF
Microfinance asset quality stress eased further in June, with portfolio at risk falling to 2.3 percent. Aggressive write-offs of bad loans by lenders helped reduce stressed loans across the sector. The sector has consolidated towards better portfolio performance and larger loan sizes. Average ticket size rose to Rs 62,100 as lenders focused on existing borrowers. Microfinance disbursements stood…
In June, the asset quality of microfinance loans continued to improve, with the share of the portfolio at risk dropping to 2.3%, according to CRIF High Mark data. This marks a decrease from 2.6% in the previous quarter and a significant drop from 7.1% a year earlier. The data focuses on loans that remain unpaid for up to 180 days. Overall, risk management remains robust, helped by regulatory measures, as reported in the latest quarterly bulletin.
Loan origination rates slowed due to seasonal factors during the quarter, according to the credit information bureau. The reduction in stressed loans was partly attributed to lenders across the sector aggressively writing off bad loans. Microfinance institutions (MFIs) have been concentrating on existing borrowers with a history of timely repayments, resulting in larger average loan sizes. As of June, the average loan amount was Rs 62,100, up from Rs 53,600 a year ago.
Geographically, Bihar and Jharkhand showed significant progress, with the share of loan origination above Rs 1 lakh increasing to 16% in Bihar from 9.8% and to 10.3% in Jharkhand from 7.7% over the past year. However, Tamil Nadu witnessed the highest concentration of large loans, with 30% of its loan originations exceeding Rs 1 lakh. NBFC-MFIs, which accounted for 45% of origination value, saw their sectoral share rise to 44% in June from 38.8% a year prior.
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