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•
Gross loan portfolio
grew at a slower pace of only 1.6% Q-o-Q by June 2019.
•
The volume of
disbursements in Q1 FY 2019-20 reduced by 40% to 1.23 crores, from 1.98 crores in Q4 FY 2018-19.
• The overall PAR levels for 1-30 and 31-180 have improved Y-o-Y,
stabilizing at less than 1%. The urban portfolio for PAR 180+ is significantly
higher than rural geographies.
•
National average ticket size and exposure
have increased by 12% and 17%
Y-o-Y respectively, largely due to big ticket
lending in FY 2019-20.
•
Written-Off Amount increased 22% over Q4
FY 2018-19 and 61% Y-o-Y by June 2019.
Industry Growth & Market Share
The gross loan portfolio of the
microfinance sector has registered a Y-o-Y growth of 33% standing at ₹191.5
crores in June 2019. While the rural portfolio grew by 37% Y-o-Y, urban
portfolio registered a Y-o-Y growth of 29%. In the overall GLP, the rural portfolio had a greater
share, standing at 54%. The rural portfolio grew Q-o-Q over Q4 of FY 2018-19 at 2.12%, while the
urban portfolio grew only by 0.92%. The industry witnessed a sluggish growth of
1.6% Q-o-Q in Q1 FY 2019-20 as against 10% in the same period last year.
In terms of the market share of
lenders, NBFC MFIs have the largest market share (37%), followed closely by
Banks (34%), SFBs (18%) and others (11%). Market share of SFBs has continued to
shrink, Y-o-Y by 1.6% in June 2019. Urban geographies are dominated by banks,
while NBFC MFIs constitute the largest portion of rural portfolio
As
of June 2019, while banks had comparable presence in both urban and rural
microfinance geographies, SFBs had a stronger presence in urban areas (22.5%)
as compared to rural locations (15%). NBFC MFIs continue to have a stronger
presence in rural areas.Sourcing Growth & Market Share
₹ 40,443 crores were disbursed in
the first quarter of the financial year 2019-20, having reduced in value terms
by 40% Q-o-Q and by 8% compared to the same quarter in the previous year. The
volume of disbursements in Q1 FY 2019-20 reduced by 38% to 1.23 crores, from
1.98 crores in Q4 FY 2018-19, while this has reduced by 18% for same period
last year.
The east, central and southern
regions have more than 50% of their disbursements, both in value and volume,
from urban geographies. The east, north and north eastern regions have more
than 50% of the disbursements from rural geographies. Around 33% of the
disbursed amount was in Eastern region, followed by south (27%), west (14%),
north (11%), central (8%) and 5% in north eastern regions as of June 2019.
NBFC
MFIs’ share in sourcing is 42% in Q1 FY1 2019-20, up by 4% from end of FY
2018-19. Share of banks reduced from 38% in FY 2018-19 end to 33% as of June
2019. SFBs which were experiencing a constant decline in share of disbursements
as of FY 2017-18 and FY 2018-19 end, saw an upward climb by 2% to reach 17% in
Q1 FY 2019-20.|
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Note:
Lender category NBFC MFIs includes all RBI registered NBFC MFIs. Banks includes
all Banks (except SFBs) reporting microfinance lending. SFBs includes all
awardees of Small Finance Bank License. Others includes generic NBFCs operating
microfinance portfolio.
Borrower Leverage & Compliance
The average ticket size per loan
has increased by 12% Y-o-Y to reach ₹31.7K in Q1 FY 2019-20. The average
microfinance exposure per borrower has grown by 17% Y-o-Y, settling at ₹35.2K
as of June 2019. 38% quarterly decline in volume of loans with ticket size
above 40K has been observed in the industry over Q4 of FY 2018-19 while Q4 of
FY 2018-19 witnessed a 53% increase in volume of disbursements over Q3 FY
2018-19.
Amongst the top states, 45% of
West Bengal’s portfolio is constituted by large sized loans of ticket size
60K+. In comparison, TN has only 1.8% of its portfolio in this segment. TN has
37% of the portfolio in the 25K-30K range and 36% in the 30K-40K ticket size
range. 25K-30K ticket size occupies the largest pie in the national portfolio
at 29%.
Over the course of the last year, Tamil Nadu has
consistently reported the highest percentage of borrowers associated with 4 or
more lenders. As of June 2019, 6.27% borrowers from Tamil Nadu have loans
running with 4 or more lenders, which is significantly higher than the
percentage in June 2018 (2.26%). The active borrower base in Tamil Nadu grew by
8% Y-o-Y and the portfolio witnessed a 33% Y-o-Y growth as of June 2019. |
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Industry Risk Profile
The 1st quarter of FY 2019-20, witnessed significantly improved
PAR 1-30 or early delinquency levels, having decreased from 2.8% to 1% from the
previous quarter. The risk level for PAR 31-180 have been relatively much lower
compared to PAR 1-30 and 180+ and reduced further to 0.9% by June 2019. A
similar trend has been observed in case of PAR 180+ level, which has continued
to improve over the course of last year, settling at 4.4% in Q1 of FY 2019-20.
At the same time, incremental write- offs have increased from 1.1% in June 2018
to 1.3% in June 2019.
Across all delinquency levels, banks are the least
exposed, with an improving credit
quality over time, followed by NBFC MFIs. For loans of ticket size 20k and
below, NBFC MFIs stand at nearly 2X PAR 180+ level and well as write offs as
compared to banks as of June 2019. Whereas in bulk of the lending in the
20K-40K ticet sizes, there is not much differentiation between NBFC MFIs and
Banks in terms of the PAR 180+ levels or write-offs.
Overall,
PAR 31-180 delinquency level has been curtailed under 1% as of June 2019, while
the PAR 180+ level delinquency although continuing to reduce in the last year,
remains high largely due to poor pre-demonetization loan portfolio. The PAR
180+ level for loans disbursed in the pre-demonetization period stood at 83% as
of June 2019, whereas for the post demonetization period disbursements, the
180+ delinquency stood at 1.4%Dive into Geography
Top 10 states account for 84% of
the national gross loan portfolio, with 57% in rural and 43% in urban
geographies. Eastern region continues to dominate the market in Q1 FY 2019-20
as well, with 33% in June 2019. The loan book in the southern region remained
at 27%, followed by west (14%), central and north east each at 8% of GLP. The
north eastern region, a typically under-penetrated market has seen expansion of
microfinance in the recent years, evidenced by the highest Y-o-Y growth rate of
42%, followed by east (37%), west (35%), while the central (30%), north (29%)
and south (29%) lower than the national portfolio growth (33%). Disbursements
from rural geographies were the largest from the eastern region (37%), whereas
those in urban geographies were dominated by the southern region (30%).
West Bengal has retained its
position at the top with largest market share of 14.7% of the national GLP.
Tamil Nadu comes close at 14.4% and Bihar at 10.1%. of national GLP. In terms
of the Y-o-Y growth, Bihar exhibits highest growth rate (50.3%), surpassing
Assam (42.3%), which had the highest Y-o-Y growth rate in March 2019. The
growth in Bihar is driven by growth in rural lending at the rate of 57% Y-o-Y,
as against 43% in Assam.
Among the top 10 states, Odisha recorded the highest
percentage of early and PAR 31-180 delinquency at 2.9% each, even with a small
loan book size of 6% of the national GLP. Tamil Nadu and Madhya Pradesh (1.3%
each) had relatively high early and PAR 31-180 level delinquencies as of June
2019, compared to other states. However, in comparison to the previous quarter,
most states have recorded relatively lower levels of delinquencies. PAR 180+
level delinquencies for Maharashtra (12.4%), Karnataka (7.1%), Uttar Pradesh
(6.6%) and Madhya Pradesh (6.3%), although reduced marginally from the previous
quarter, continue to remain high as of June 2019 due to continuity of bad
pre-demonetization loan book prior to Q3 of FY 2016-17.
Our Views
Our Views
|
Our Views
|
The microfinance sector in India,
has been a strong enabler in including the financially underserved and unserved
in the formal financial ecosystem. With government’s increasing focus on
financial inclusion in the backdrop, the microfinance sector in India has
witnessed a continuous growth trajectory in the recent years, with a 33% Y-o-Y
growth as of June 2019. As of June 2019, the active customer base is 5.55
crores, a 16% Y-o-Y growth. The average ticket size of microfinance loans also
grew by 12% Y-o-Y to ₹31.7K in June 2019.
Eastern Indian economy, which is
traditionally driven by agriculture and mining sectors has been fuelled by the
growth in the microfinance sector, with Bihar witnessing highest Y-o-Y growth
of loan book (50.3%) as of June 2019, supported by West Bengal which occupies
the pole position with the microfinance loan book increasing Y-o-Y by 33.5%.
The Y-o-Y rural portfolio grew at a
faster pace (37%) than urban portfolio (29%), with the rural-urban mix in the
overall portfolio remaining constant in Y-o-Y terms. The overall PAR levels for
1-30 and 31-180 days past due have improved Y-o-Y, stabilizing at less than 1%
as of June 2019. PAR 180+ levels, albeit reduced, remain high. Both urban and
rural geographies have reached low levels of delinquency for early and 31-180
days, while the urban portfolio for 180+ is at significantly higher risk than
rural geographies.
MicroLend
MicroLend is a quarterly
publication from CRIF High Mark on Microfinance lending in India. The
publication presents trends & analysis of key parameters such as Gross Loan
Portfolio, Growth, Market Share, Borrower Leverage, Compliance and Portfolio
Risks. The report also slices the data for major states and Urban/Rural
geographies. Semi-urban portfolio is reported as part of urban split in the report.
About CRIF India
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