300% jump in microfinance loans by value disbursed during April-June quarter from year-ago: Report

Credit and Finance for MSMEs: Despite the second Covid wave, the microfinance industry (MFI) disbursed Rs 25,808 crore loans during April-June 2021 quarter - up 300 per cent from Rs 6,460 crore loans disbursed during the year-ago period following the first Covid wave.

However, disbursements as of June 2021 had declined by 72 per cent in comparison to Rs 94,001 crore loans disbursed in the quarter ending March 2021, showed quarterly report titled Microfinance Pulse by SIDBI and Equifax India for the quarter ended June. In terms of volume, while there was 209 per cent growth in the number of loans disbursed from 23 lakh in the April-June quarter last year vis-à-vis 71 lakh loans in June quarter this year, the growth rate contracted by 70 per cent from 2.38 crore loans in January-March quarter this year.

'Compared to 2019 levels, the disbursement is yet to be scaled up fully but in comparison to last year, the sector has already picked up the pace. While the April-June quarter last year was impacted due to Covid, this year the June quarter has seen significant improvement. However, in comparison to the September quarter last year, the growth we see is around 80-90 per cent for this year's September quarter,' P. Satish, Executive Director at India's MFI body Sa-Dhan told Financial Express Online.

During the Covid period, the MFI sector had managed to stand its ground with flat year-on-year growth in the outstanding portfolio from Rs 224,204 crore in the June quarter of 2020 to Rs 222,060 crore this June along with an 11 per cent drop from Rs 249,277 crore in portfolio outstanding in March 2021 quarter. Banks and non-banking financial companies (NBFCs) had contributed over 75 per cent to the portfolio outstanding.

'There was no collection in April due to the lockdown last year while May saw some collections happening and hence portfolio outstanding was almost stagnant. This year, the disbursement was almost zero after the second wave but the collection was still nominal as there was no complete lockdown. Hence there is a dip in portfolio outstanding,' Vivek Tiwari, Founder and CEO, Satya MicroCapital told Financial Express Online.

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The disbursement had dropped for the NBFC-MFI Satya MicroCapital to a nominal amount of Rs 5-6 crore in June last year due to Covid from around Rs 75 crore disbursements in June 2019. However, 'this June, we have again disbursed around Rs 75-80 crore. The sector is expected to grow by 25-30 per cent at least this financial year in comparison to last financial year,' added Tiwari.

On the other hand, delinquency by 1-179 days past due for the MFI sector had jumped to 31.44 per cent in June quarter this year from 13.59 per cent in March 2021 and 3.19 per cent in June quarter last year. The highest share was of 1.29 days past due by nearly 15 per cent followed by 10 per cent of 30-59 days past due. In fact, except 90-179 days past due delinquency bucket, all the delinquency buckets have increased in June 2021 from March 2021.

'As per our data, for the September quarter as well, there is a flat growth from September 30 last year. The delinquency had improved from the June quarter while in comparison to last year, it is slightly higher as the moratorium was there last year. However, in comparison to the first quarter of this financial year, the portfolio risk levels in the second quarter have come down,' added Satish.