According to Sa-Dhan’s “Bharat Microfinance Report – 2016”, the Indian microfinance industry is pegged at Rs. 63,853 crores making it about US$ 10 billion industry. The industry is beginning to see benefits of scale with reduced interest for borrowers. The top 10 NBFC-MFIs contributing 80% of the sector’s Gross Loan Portfolio or over Rs. 40,000 crores have a weighted average interest rate of 23.13%, far below the 26% max cap under PSL guidelines.
Sa-Dhan’s Bharat Microfinance Report shows that over 36 NBFC-MFI members have reduced rates significantly in the last financial year itself. The high growth rate continues, despite Bandhan, which was the largest MFI, becoming a bank. While as of March 2016, the total loan portfolio of MFIs has reached an all-time high of over Rs. 63,853 crores clocking 31% growth, but if Bandhan’s loan portfolio of Rs. 9,524 crore of 2014-15 is taken out the actual growth rate of the sector between 2014-15 to 2015-16 is over 60%.
The sector witnessed a healthy growth in the client base with over 28 lakhs new members taking the total number of clients to over 399 lakhs. But the average loan per borrower of Rs. 11,425 is less than last year’s Rs. 13,162.
Speaking about the report, P. Satish, Executive Director – Sa-Dhan, said, “Despite Bandhan going out of microfinance space, the sector witnessed strong growth. Attaining over 28 lakhs clients is no mean feat. This goes on to show that the microfinance industry, having reached its inflection point, is growing steadfastly. However, more than 100 % growth of 13 MFIs does raise some concerns.” He further added, “MFIs are finding BC model rather attractive on the credit side.”
The year saw a huge growth in the Business Correspondents (BC) model. With RBI allowing NBFC-MFIs to act as BCs, the managed portfolio has substantially increased. In the last financial year, the BC Portfolio constituted 13% of the total portfolio and 47% of the managed portfolio of MFIs. The BC portfolio amounts to Rs. 7,894 crores.
The microfinance industry is showing steady growth. Compared to last year’s client base of 371 lakhs the number of clients has gone up to 399 lakhs in 2016. The following chart represents the journey of the industry since 2001.
As per the NSS data of various years, including the latest one of 2013, the majority of the population is still dependent largely on informal and expensive sources, including money lenders to meet their credit needs. The loan portfolio of the MFIs and its trends are analyzed below to understand the performance of the institutions and their contribution to the goal of financial inclusion.
The share of NBFC-MFIs stood over 88%, followed by Societies and Trusts at 9%. Nearly 88% of the portfolio is held by MFIs with a portfolio size above Rs. 500 crores. A list of top 10 MFIs in terms of the loan portfolio is indicated below. Among the top 10, six MFIs have posted a growth between 53% to 191 % in the loan portfolio.
|S. No.||Name of MFI||Gross Loan Portfolio (Rs crore)|
|1||Janalakshmi Financial Services Ltd.||10983|
|2||SKS Microfinance Ltd.||7682|
|3||Ujjivan Financial Services Ltd.||5389|
|5||Equitas Micro Finance Ltd.||3283|
|6||Satin Creditcare Network Ltd.||3271|
|7||Grameen Koota Financial Services Pvt. Ltd.||2539|
|8||Spandana Sphoorty Financial Ltd.||2282|
|9||ESAF Microfinance & Investments Pvt. Ltd.||1925|
|10||Share Microfin Ltd.||1540|
Microfinance is usually related to the rural areas of the country. According to Bharat Microfinance Report 2016, it is seen that urban population constitutes a majority of borrowers.