Microfinance AUM up 22% in FY23, MFIs top lenders with 40% share

Gross loan portfolio of the microfinance industry rose 22 per cent in FY23 to ₹3.5-lakh crore, serving 6.6 crore unique borrowers. The number of active microfinance loan accounts increased 14.6 per cent to 13 crore as on March 2023, per data released by MFIN (Microfinance Institutions Network).

NBFC-MFIs continued to be the largest provider of micro-credit in terms of loans outstanding, with their share of the total industry portfolio rising to 40 per cent from 35.2 per cent in FY22.

Banks held the second place with a market share of 34 per cent followed by small finance banks at 16.6 per cent. Other NBFCs accounted for 8.5 per cent share and other MFIs for 1.0 per cent.

In terms of regional distribution, East and North-East and South India accounted for 63 per cent per cent of the total portfolio. Bihar replaced Tamil Nadu as the largest State in terms of portfolio outstanding, followed by Uttar Pradesh at third place.

“Share of East and North-East fell continuously over FY23, reaching 34.9 per cent from 37.7 per cent as of March 2022. South and North region gained more than 1 per cent each,” said Devesh Sachdev, Chairperson, MFIN.

New loans disbursed after Covid have performed much better than, resulting in a sharp decline in the 1-60 day-bucket of PAR (portfolio at risk) to 1.6 per cent from 4.3 per cent a year ago, he added.

NBFC-MFIs

AUM of NBFC-MFIs increased 39 per cent YoY to ₹1.3-lakh crore in March 2023, including owned portfolio of ₹1.1-lakh crore and managed or off-balance sheet portfolio of ₹23,931 crore.

The lenders disbursed loans worth ₹1.3-lakh crore during FY23 through 3.1 crore accounts, compared with disbursements of ₹81,936 crore in FY22 through 2.2 crore accounts. The average ticket size rose 13 per cent YoY to ₹42,010 for FY23.

NBFC-MFIs, on an aggregated basis, have a network of 18,739 branches with 1.6 lakh employees as of March 2023. They received debt funding of ₹74,787 crore during the year — 59.2 per cent higher than FY22. Total equity grew 25.4 per cent to ₹26,332 crore.