Kolkata, February 26 – The disbursement of microfinance loans witnessed a sharp decline of 35.8% to ₹22,091 crore in the third quarter ending December 2024, compared to the corresponding period of the previous year, according to a report by the Microfinance Institution Network (MFIN).
The report further highlighted that the assets under management (AUM) of microfinance institutions (MFIs) stood at ₹1,42,695 crore as of December 2024, reflecting a marginal decrease of 0.1% year-on-year.
Despite the overall decline in disbursements, the average loan amount disbursed per account saw a 15.2% increase, reaching ₹51,691 crore in Q3 FY24. However, the portfolio at risk (PAR), which measures loans overdue for more than 30 days, deteriorated significantly to 8.8% as of December 31, 2024, compared to 3.5% in the previous year.
On the funding side, NBFC-MFIs secured ₹12,921 crore in debt financing during the quarter, primarily sourced from banks. Meanwhile, the total equity of MFIs grew by 9.3%, reaching ₹35,451 crore.
Addressing the challenges faced by the sector, MFIN CEO and Director Alok Misra stated, “The industry is navigating a period of curtailed funding due to stricter credit underwriting norms.” He further reported that the gross loan portfolio (GLP) of the sector stood at ₹3,85,348 crore as of December 31, 2024.
The report underscores the headwinds faced by the microfinance sector, with tightening credit conditions and rising default risks posing challenges for future growth.
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