New Delhi, Nov 9 (IANS) Despite the onset of pandemic in the last quarter of the fiscal 2019-20, Indias microfinance industry grew by 31 per cent.
According to Sa-Dhan’s “Bharat Microfinance Report –2020”, the industry clocked a loan portfolio outstanding of Rs 2.36 lakh crore as on March 31, 2020.
This is according to data collated from 252 lenders, including microfinance institutions, not-for-profit microfinance institutions, NBFCs, SFBs, and banks.
Of the total portfolio, 32 per cent is from NBFC-MFIs, whereas banks and SFBs together contributed 59 per cent of the portfolio. The year-on-year (YoY) growth of the portfolio is 38 per cent for NBFC-MFIs whereas banks’ growth is 24 per cent and SFBs’ portfolio has grown 34 per cent. NBFC-MFIs have grown loan accounts by 26 per cent and average ticket size by 9 per cent.
According to P. Satish, Executive Director, Sa-Dhan, “While the year started on a positive note, the outbreak of the pandemic in the last quarter of fiscal 2019-20 threw a dampener on our projected growth. To add to the woes of the industry, people were deeply affected by natural disasters in certain states of the country and a spurt in spread of fake news by groups with vested interest.”
“The current fiscal’s first two quarters has been anything but bright. Nationwide lockdown during the first quarter of the current fiscal due to Covid-19 resulted in almost no disbursement. However, since July we are witnessing a rise in repayments and disbursement.
“Despite unprecedented challenges, we expect the industry to grow more modestly this year at around 15 pert cent, given that the first two quarters saw much reduced activity (repayments and fresh disbursements) due to the lockdown and the ensuing moratorium. Mid and small MFIs have also been severely affected with a liquidity squeeze and high cost of funds,” he said.
The YoY growth of loan outstanding in FY 2019-20 was 31 per cent, which is substantially lower than the growth of 41 per cent observed in FY 2018-19.
The decline in growth rate is attributed to natural disasters that wreaked havoc in Odisha, Kerala and Bengal, and spread of misinformation and false rumours by vested interest political groups in certain districts of Assam and Karnataka.
Historically, vested interest groups have been taking advantage of the vulnerability of the underserved people of the society, especially where microfinance institutions have been doing path-breaking work towards financial inclusion, the report said.
Releasing the Bharat Microfinance Report, G.R. Chintala, Chairman, NABARD, said, “Despite all odds, the microfinance sector works with resilience to bring the financially underserved in the ambit of financial inclusion. MFIs can truly help create micropreneurs, which is the need of the hour as this will help to expand the ambit of financial inclusion in its true sense.
“At NABARD, we have zeroed in on various key intervention including creation of Livelihood Enhancement Funding, setting up of Joint Liability Groups, augmenting Social Enterprise and easing of loan woes of small MFIs to enable financial inclusion for the underserved by 2025.”