Small Industries Development Bank of India (SIDBI) and Equifax, collaborated to launch a first-of its-kind newsletter “Microfinance Pulse” to track the trends in the microfinance sector viz. disbursements delinquencies, state-wise distribution, top loan categories etc.
This data will act as a lighthouse helping the microfinance industry and policymakers navigate through crests and troughs of lending cycle, so as to ultimately facilitate responsible lending.
The Microfinance Industry plays a pivotal role in attaining financial inclusion goals in India. With more than 5 crore lives touched as on December 2019 and an yearly growth recorded at 32% (December 2019), the sector is exhibiting a multitude of changes. The 5th Microfinance Pulse focuses on highlighting and capturing these changes, trends, sectoral dominance, geographical dynamics and a comprehensive industry functioning.
Banks dominate in the Microfinance sector across parameters of Disbursement, Outstanding balances and Average Ticket Size
The Microfinance Industry witnesses a 32% Y-o-Y growth in quarter ending December 2019. At the institutional level this growth is fueled by Banks demonstrating 59% portfolio outstanding growth from December 2018 to December 2019, followed by SFBs at 43%. In terms of market share, Banks contribute highest – 40%, to the industry portfolio of `208,865 crore as on December 2019.The 2nd highest contribution at 32% by NBFC-MFIs followed by SFBs at 18%. Industry disbursement trends indicate growth by value and volume. Banks lead disbursement growth (by value) with a Q-o-Q increase in share from 38% in OND’18 to 45% in OND’19. Industry clocked 23% Y-o-Y growth in disbursement during OND’19 with disbursement of `63,969 crore. Industry ATS matured by 11% from `31,499 in OND’18 to `34,880 in OND’19. Bank ATS is 17% higher than industry ATS as on December 2019, at `40,740. NBFCs follow the lead in ATS distribution at `36,874 - 6% higher than industry ATS (December 2019). Industry 1+ Delinquency touched 3.40%. Banks and SFBs showcase well-regulated 90+ delinquencies.
Geographical exposure basis Outstanding balances widens. Aspirational Districts contribute 11% to Industry Outstanding balances.
Nine Indian states have an Outstanding balance of greater than `10,000 crore contributing more than 70% to Pan India outstanding. Pan India 90+ Delinquency peaked to 0.54% with some southern and western states experiencing more than 0.60% delinquency levels. Aspirational Districts contribute 11% to Pan India Outstanding balance and 90+ delinquencies are at 0.50%. Tamil Nadu is the top state in terms of POS with 15% Pan India share. Tamil Nadu ATS as on December 2019 is 0.95 times of the industry ATS of `34,880. NBFCs have the highest ATS at `36,970 in Tamil Nadu, which is 11% higher than the state ATS of `33,262. NBFC-MFIs hold highest market share of 33% by Outstanding balances in Tamil Nadu followed by SFBs at 28%. Top 10 Districts of Tamil Nadu contribute more than 50% to the state POS of `30,578 crore, as on December 2019.
An Inverse Relation between Loans and Loan Cycle
There is an inverse relation between the number of loans sourced and Loan Cycle IDs and delinquencies. Higher the Loan Cycle ID, lower the number of loans sourced and delinquency. Loan Cycle ID -1 dominates with 44% disbursed amount share.