Despite an improvement in overall repayment collection, Sa-Dhan, the trade association for the microfinance business, said that at the end of June, almost 12% of all microfinance loans totaling Rs 2.76 lakh crore were still non-performing assets (NPA).
NPA amounts to Rs33,000 crores of rupees. “The recovery rate has increased from the previous quarter and is already close to 99% in some states. But there are still certain regions where the collecting is below average. For instance, Assam has a collecting efficiency of 50—55% “According to Sa-quarterly Dhan’s report.
Several important states, including Assam, West Bengal, Kerala, Tripura, and Chhattisgarh, have shown below-average recovery and have a negative impact on the asset quality overall. By the end of June 2022, the sector’s NPA was around 12% overall, but NBFC-MFIs as a whole had 9% of their portfolio, or Rs9,7849 crore, in non-performing assets.
At the end of June, the industry had increased by 24% year over year to Rs2.76 lakh crore from Rs2.22 lakh crore. “The industry is back on track after overcoming pandemic-related challenges. It has achieved a strong rise despite being busy throughout Q1 implementing the new RBI regulations, according to Sa-Dhan executive director Jiji Mammen.
“Though the flow of cash into the industry has increased, several smaller MFIs still have trouble getting money from banks. To close this gap, we are working, he added. With the exception of banks, every lender’s portfolio saw double-digit growth. Loans from non-bank lenders have increased by 55%, followed by loans from NBFC-MFIs, small financing banks, and not-for-profit MFIs, which have seen increases of 35%, 28%, and 21%, respectively.
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