PROGRESS OF MFI OPERATIONS DURING 2021-22
Micro Finance Institutions play a significant role in enhancing micro entrepreneurs
especially women in rural area. MFI financial and non fianancial services
offered were found unable to significantly empower disadvantaged poor women by
improving their livelygood and development of their business.
“Women are playing an increasingly important role in providing impetus to rural economy. MFI have extended financial help to the tune of R65,000 crore to more than 28 lakh through Self-Help Groups in 2021-22. This is four times the amount extended in 2014-15. The government has also provided training to thousands of members of the women self-help groups and made them partners as ‘Banking Sakhi’. These women are delivering banking services to rural households at the doorsteps”.
Portfolio
After the turmoil of the pandemic, the financial year 2021-22 ended on a positive note for the sector and is inching toward the pre COVID level. The combined portfolio of the sector (including banks and SFBs) continues to be on a growth trajectory and reached R2,62,599 crore at the end of financial year 2021-22 with a Y-o-Y growth rate of 5%. Out of the total, the combined MFI portfolio (for-profit and not-for-profit) constitutes 44% share of the total sector which is R1,15,917 crore. In the last financial year 2020-21, Not-for-Profit MFIs showed a remarkable growth of 30% followed by NBFC-MFIs with a 19% Y-o-Y growth rate. Tamil Nadu, Bihar, Karnataka, Uttar Pradesh and Madhya Pradesh are the top 5 states in terms of share of MFI portfolio and contribute toward 59% of the MFI portfolio.
Disbursement:
Total disbursement in the year 2021-22
was R2,49,675 crore which is an increase of 27% over the previous year. Out of total disbursement, MFIs disbursed R1,01,949 crore recording an increase of 43% over the previous
year. The top 5 states
in terms of disbursement from MFIs are Bihar, Tamil Nadu,
Karnataka, Uttar Pradesh and Maharashtra and contribute to 60% of the MFI
disbursement amount. The remarkable
increase in the quantum of disbursement by MFIs could be attributed to continuous support from the government in
terms of special liquidity funds, TLTRO funds and the Credit Guarantee Scheme.
The growth in the number of active loans & total portfolio, a spurt in disbursement and an improvement in collection efficiency are signs of the economy opening up and the livelihoods of MFI borrowers coming back to normalcy.
Portfolio Quality
The
overall portfolio quality of the sector has improved during 2021-22 as the
Portfolio At Risk (PAR) 30+ has
reduced to 5.27% at the end of the financial year 2021-22 from 9.01% as of the
end of March 2021. PAR 90+ has also improved
and stood at 2.43% at the end of March 2022 from 4.10% at the end of the previous financial
year. Assam, West Bengal, Kerala,
Tamil Nadu, and Madhya Pradesh
are among the states which have PAR 30+ levels higher than the national
average of 5.27%, whereas Bihar, Haryana,
Uttar Pradesh and Punjab have PAR values lower than the national
average. Despite the improvement, the sector has recorded
NPA of around R33,000 crore along with over R7,000 crore written off during 2021-22.
Status of MFI staff:
MFIs currently operate in 28 States, 5 Union Territories and 595 districts in India and employ 1.61 lakh personnel, out of which 10% are women and 61% are field staff. However, last year the sector faced a new challenge in form of a higher attrition rate. This has shifted the focus of MFIs on the need to systematically allocate resources for staff welfare, staff motivation and staff training.
Digitization:
The pandemic resulted in MFIs looking at
digital collection methodologies using a variety of technologies and tying up with Payment
Banks, Payment Wallets
and other payment
technologies. Data reveals
a steady increase
in volumes under digital collections. Technology usage has accelerated even for customer
acquisition, loan processing and monitoring as well as the organization and management of groups.
New Regulations:
The issuance of the new Regulatory Framework for Microfinance loans by the RBI will continue the growth trajectory of MFIs in the coming years. Currently, MFIs are gearing up to implement the new regulations in the field by finalising the required policies on interest rate, training on accurate income assessment of household, etc. SROs now have a greater role to ensure client protection and responsible lending as the RBI has given the liberty to MFIs to fix the pricing of loans and other changes.
NPA STATUS OF MFIS AS OF 31ST MARCH 2021 AND 2022
At the beginning of the financial
year 2020-21, the Indian economy faced a huge challenge
in form
of a nationwide
lockdown due to the sudden outbreak of the pandemic. The microfinance sector
was
also affected greatly. The
overall NPA of the sector shot up from 4% as at end-March 2020 to 10.8% at
the end-March 2021 and further rose to 11.83%
as at end-March 2022. The only segment in which the
NPA has continuously reduced is NBFCs. The top five states in terms
of NPAs at the end of March
2022 are Assam,
Meghalaya, West Bengal, Maharashtra and Delhi. These states have more than 15%
of their portfolio as NPA
PROGRESS UNDER MFI/MFO-BANK LINKAGE PROGRAMME
-
governing discipline followed by the MFIs has enabled them to access more
liquidity from the banking sector,
both public and private. Table
2.8 provides details
of bank credit
extended to MFIs. As compared
with 28601 loan accounts during 2020-21 amounting
to R15,322.33 crore, a total of 24,686
loan accounts amounting to R26,567.02 crore were disbursed during the year
2021-22. Hence, the average
loan size disbursed
by banks to MFIs during 2021-22 has gone up from R0.54 crore to R1.61 crore from the previous year.
However, loan amount increased by 73%. In terms of loans outstanding, banks/FI loans to MFIs have registered a negative growth of 4% in number of loan accounts while reaching an overall growth of 58% for total loans outstanding.
Though Indian economy faced a huge challenge
in form of a nationwide
lockdown due to the sudden outbreak of the pandemic. MFI is extremely
beneficial to the development of the rural women who don’t have any access to
banking facilities and plays an
essential role in their empowerment.
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2019-20 |
2020
-21 |
2021-22 |
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Pa PrParticulars |
No. of accounts |
Amount |
No. of accounts |
Amount |
No. of accounts |
Amount |
|
Lo loansdi disbursed sb by bank nks/FIs to MMFIs/
MMFOs |
20,744 |
20,875.97 |
28,601 |
15,322.33 |
24,686 |
26,567.02 |
|
L loansout tststanding ag against MMFIs/ M M FOs as as on 31 31 MMarch, |
52,288 |
29,896.67 |
61,259 |
24,494.04 |
58,849 |
38,806.35 |
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Source: Reporting Banks through Ensure
portal |
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