June 19, 2024
Loans

Rs 38,072 crore microfinance loans written off as of March 2024; loans unpaid beyond 180 days swell: Report – SME News


The share of loans written off by microfinance lenders in their loan books continues to expand year-on-year. According to the latest quarterly report on microfinance lending by credit bureau Crif High Mark, the write-offs have jumped to 8.6 per cent (Rs 38,072 crore) of Rs 4.42 lakh crore in gross loan portfolio (GLP) as of March 2024 from 7.7 per cent (Rs 26,880 crore) of Rs 3.49 lakh crore in GLP as of March 2023.

As of March 2022, microfinance loans written off stood at 4.8 per cent or Rs 13,752 crore of Rs 2.86 lakh crore GLP and 3.1 per cent or Rs 8,060 crore of Rs 2.60 lakh crore, according to earlier reports by Crif High Mark. 

Writing off bad loans is a regular exercise by lenders for cleaner balance sheets and tax efficiency. However, borrowers of such loans remain liable for paying back to the lender unlike in the case of waived-off loans. 

With respect to delinquency in the portfolio, microfinance loans unpaid for more than 180 days (excluding write-offs) increased to 9.6 per cent as of March 2024 from 9.1 per cent as of March 2023, 8.4 per cent as of March 2022 and 4.4 per cent as of March 2021. 

In comparison, loans due beyond 30 days stood at 2.1 per cent as of March 2024 from 2.2 per cent as of March 2023 improving from 6 per cent as of March 2022 and 9.4 per cent as of March 2021. Moreover, loans unpaid beyond 90 days improved to 0.9 per cent as of March this year from 1.1 per cent during the year-ago period, 2.7 per cent as of March 2022 and 4.2 per cent as of March 2021. 

However, the sector continued to see growth with a 26 per cent jump in GLP (to Rs 4.42 lakh crore) as of March 2024 from the year-ago period at Rs 3.49 lakh crore. 

NBFC MFIs (non-banking financial companies – microfinance institutions) had the highest share in the portfolio with 39.2 per cent followed by banks with 33.2 per cent share, small finance banks with 16.9 per cent share and NBFCs with 10.2 per cent share as of March 2024. 

The total loan value disbursed also grew by 4.62 per cent to Rs 1.13 lakh crore across 2.36 crore loans during the March quarter from Rs 1.08 lakh crore across 2.52 lakh crore loans during the March quarter in the preceding fiscal. Further, the average loan size also grew marginally to Rs 48,200 during the March quarter in FY24 from Rs 43,100 during Q4 FY23.

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