The microfinance sector in India saw a steady growth in loan books in the December quarter of 2021, even as the new variant of COVID 19 also saw a simultaneous decline in loan disbursals, according to a recent report by the CRIF High Mark Credit Information Service.
The surge in COVID-19 cases in India, associated with the Omicron variant, has impacted micro lending in Q3 FY 22, marked by a decline in disbursements, says the report titled MicroLend Volume XIII.
However, it adds that "lenders are hopeful that the recent extension of the Emergency Credit Line Guarantee Scheme for another year will provide the necessary fillip to the microfinance sector in the coming months."
The report also highlighted that the rural market grew by 7.6 percent quarterly, compared with the 3.8 percent growth in the urban market for the December 2021 quarter.
According to the report, the microfinance sector grew 5.9 per cent on a quarterly basis and 10.4 per cent annually as of December 21. The total outstanding loans for the microfinance category of loans was Rs 2.39 trillion in December 2020, which grew to Rs 2.63 trillion as of December 2021, or a growth of 10.4 per cent. On a quarterly basis, this amount was Rs 2.49 trillion in September 2021, or a growth of 5.9 per cent.
Of the total Rs 2.639 trillion loan outstanding, rural India had a share of 58.65 per cent, at Rs 1.548 trillion loan outstanding, with urban India having the remaining 41.35 per cent share of Rs 1.091 trillion loan outstanding.
According to the report, the number of active microfinance loan customers increased by 1.7 percent per year from December 2020 to December 2021.
When it came to loan disbursals, banks topped the list, having sanctioned Rs 999.72 billion, accounting for 37.9 percent of the total microfinance loans disbursed for the quarter ended December 2021. Next came the NBFC-MFIs, who disbursed Rs 881.68 billion, or 33.4 per cent of the total loans. Finally, small finance banks disbursed Rs 454.20 billion, or 17.2 per cent of loans. Others disbursed Rs 302.91 billion, or 11.5 per cent of the total loans disbursed.
