Microfinance Industry Witnessed 53% YoY Growth in Q3 FY17:MFIN Report

BY Tricitynews Reporter

Chandigarh 16^th February:- According to the recently released report by Microfinance Institutions Network, a Self-Regulatory Organization (SRO) and a premiere industry association, the microfinance industry has grown by 53% year on year for the relevant period. The aggregate GLP of microfinance institutions stood at Rs 56,634 crore in Q3 FY17 as compared to Rs 36,912 crore in Q3 FY15-16. 

According to the report, there was a decline of 26% in the number of loans disbursed and a 16% decrease in loan amounts disbursed as compared to the corresponding quarter of the last year. The decrease on both disbursement and collection is due to the impact on industry post discontinuance of the High Value Currency Notes (HCVNs) of Rs. 500 and Rs.1000. The pulling out of the HCVNs from circulation significantly impacted the microfinance sector which is 99% cash driven. Speaking on the effects of demonetization on the industry, Ms Ratna Vishwanathan, CEO, MFIN said that post the discontinuation of HCVNs with effect from midnight of 8th November, the industry was thrown out of gear initially. This was to be expected in a sector which is 99% cash intensive and has a unique doorstep delivery model specifically for the unbanked and under banked. Ratna Vishwanathan further informed that during the whole two months post discontinuing of High Value Currency Notes, MFIN has had to engage with State Governments at both the ministerial level as well as the bureaucracy, the RBI and extensively with the press to quell the surge of disinformation with reference to microfinance practices. The irony is, however, that over the last 4-5 years, 45 million women have been brought into the framework of a regulated platform from which to access credit. But the fragility of the process is evident in the fact of how quickly misinformation can lead to disrupting their credit histories making them once again vulnerable to the grey market as their primary source of credit. This illustrates the need for further educating clients on how best to take care of their own interests so as not to become victim to misinformation. Going forward, this experience can only lead to further strengthening the sector and making it more resilient in the face of any exigency that may come forth.

Over half of the total disbursements (which accounts for 56%) during the quarter came from 5 states, namely - Karnataka, Tamil Nadu, Maharashtra, Odisha and Bihar. The loan amount disbursed was INR 14,707cr in Q3 FY15-16, and is at INR12, 424cr in Q3FY 16-17. The employee base of NBFC-MFIs has also grown significantly from 68161 to 102,716, showing an increase of 51% from last year.

GLP distribution is highest in South Indiaat33%, followed by North India contributing to 27%, West India at 24% and East India at 16%. The industry has witnessed a42% growth in the client base from last year, during which MFIs provided microcredit to 3.38 crore borrowers as compared to 2.37 crore to borrowers in Q3 FY 15-16.