KOLKATA: Microfinance loan disbursements declined by 35.8 per cent to Rs22,091 crore in the third quarter ending December 2024, compared with the corresponding period of the previous fiscal, according to a report by the Microfinance Institution Network (MFIN), the umbrella body for microfinance institutions (MFIs).
Key highlights
The assets under management (AUM) of MFIs at the end of December 2024 stood at Rs1,42,695 crore, reflecting a marginal decline of 0.1 per cent compared with the same period in December 2023.
The average loan amount disbursed per account in the third quarter increased by 15.2 per cent to Rs51,691 crore compared with the same quarter of the previous fiscal. The portfolio at risk (PAR), which measures unpaid loans exceeding 30 days, worsened significantly to 8.8 per cent as of December 31, 2024, up from 3.5 per cent in the previous corresponding period.
NBFC-MFIs received debt funding of Rs12,921 crore during the third quarter, with banks being the primary contributors. The total equity of MFIs rose by 9.3 per cent in the third quarter, reaching Rs 35,451 crore.
Funding crunch
Alok Misra, CEO and Director of MFIN, noted that the industry is facing curtailed funding due to stricter credit underwriting norms. As a result, the gross loan portfolio (GLP) of the sector stood at Rs3,85,348 crore as of December 31, 2024.
The steep decline in disbursements underscores the challenges faced by the microfinance sector, which is grappling with funding constraints and worsening asset quality, raising concerns over future growth prospects.
